President Donald Trump just tossed another curveball into the global trade arena and this time, it’s aimed at anyone still doing business with Russia. Trump floated the idea of slapping 100% tariffs on Russia unless a peace deal is reached within 50 days. But that’s not where the real pressure lies. According to the U.S. ambassador to NATO, Matt Whitaker, the move would actually hit countries like India and China buying Russian oil. Markets didn’t blink suggesting most investors aren’t pricing it in just yet. But trade analysts caution that these secondary tariffs could be a nightmare to enforce and risk backfiring, especially as China and India double down on their energy ties with Moscow.
India, which has steadily increased its imports of discounted Russian crude since 2022, may be walking a tightrope. Officials in New Delhi reportedly believe the threat is more about pressuring China, but they’re not ruling out collateral damage. With a U.S.-India trade deal on the table, New Delhi is growing increasingly wary of what it sees as Washington’s erratic behavior. Prime Minister Modi’s team, while still engaging, may push back harder if these threats escalate. Meanwhile, India’s External Affairs Minister just wrapped up a high-profile meeting with Xi Jinping in Beijing a first in over five years signaling a potential reset in Sino-Indian ties at a time when both nations are frustrated with U.S. unpredictability.
What makes this even more intriguing is the broader backdrop. The U.S. is simultaneously softening its stance with China greenlighting Nvidia (NASDAQ:NVDA) to resume sales of AI chips and signaling a possible TrumpXi summit later this year. That could be short-lived. Any disruption to China’s Russian oil supply might reignite trade tensions just as relations were stabilizing. As energy security becomes the new geopolitical fault line, Trump’s tariff threat may end up tightening the BRICS alliance rather than isolating Moscow. For investors, this may be less about oil prices and more about watching how quickly emerging economies realign in response.
This article first appeared on GuruFocus.
