US Tariffs Threat Looms Over China and India Over Russian Oil Purchases

In a move that could further escalate trade tensions, US President Donald Trump has threatened to impose punitive tariffs on China and India over their continued purchases of Russian oil. Bilateral trade between China and Russia, which stood at $19.14 billion in July, hit a year's high recently, even as barrels of Russia's Urals oil are being offered at a discount to Chinese refineries.

Background and Context

The threat comes amidst the US administration's attempts to mediate the Ukraine conflict and its efforts to disentangle the alliance between Russian President Vladimir Putin and Chinese President Xi Jinping. The US has already imposed an additional 25% tariff on Indian imports over its purchases of Russian oil, bringing the total levy on one of America's key trade partners to 50%. This has put India's non-alignment policy under severe strain.

Key Developments

Despite the looming tariff threats, China has vowed to continue buying Russian oil. It is legitimate and lawful for China to conduct normal economic, trade and energy cooperation with all countries around the world, including Russia, China's Foreign Ministry said. Analysts believe that China's strategic goals require a stable and secure supply of critical resources such as oil, and therefore, it is unlikely to stop buying oil from Russia.

Meanwhile, Trump has said that his special envoy, Steve Witkoff, may travel to Russia just days before a deadline for Moscow to reach a peace deal with Ukraine or face secondary tariffs targeting its oil exports.

Implications and Reactions

The US's stance on India's oil purchases from Russia and its demand for trade 'reciprocity' has put Prime Minister Narendra Modi in a tight spot. He now faces a difficult choice between high tariffs or giving up cheap oil.

There are suggestions that the tariff threats and possible sanctions on Russia's partners could raise oil prices, inflation, and costs for US consumers. If Trump decides to impose new sanctions, the economic impact could fall heavily on the US, analysts told CNN.

Conclusion

As the deadline approaches for Moscow to reach a peace deal with Ukraine, the global markets are watching closely. It remains to be seen how China and India respond to the US tariff threats and what implications it will have on their trade ties with Russia and the US. The geopolitical dynamics are complex, and a resolution seems challenging but inevitable.