Donald Trump has been forced to change gear on Ukraine. After berating President Zelensky in the Oval Office on 28 February for not giving in to Russia’s demands, the US President’s soft approach to Vladimir Putin has fallen apart. ‘My conversations will him are always pleasant, and then the missiles go off at night,” admitted a despondent Trump during a recent joint briefing along with NATO’s Secretary General Mark Rutte.
So now the tough approach! More Patriot missiles for Ukraine, and 50 days for Russia to work out a deal to end the war or face a fresh round of withering sanctions. In this round, maybe the Ukraine war is going to reach India’s shores.
Donald Trump has done all the sanctioning he can since February 2022 when Russia first invaded Ukraine. Direct sanctions against Russia won’t work. So, Trump opted for the next best thing in his tool kit: secondary sanctions. Those countries continuing to trade with Russia will be slapped with a 100 percent tariff.
High trade volume
The immediate target is Russian oil. The country produces 10 percent of the world’s crude; and Russia has carried on its brutal campaign against Ukraine thanks to the oil revenue generated through discounted sales to China, India, Brazil and Turkey. Despite western sanctions, Russia earned a whopping $192 billion from oil sales last year, says the International Energy Agency.
The new dispensation has been defined well by NATO’s Secretary General Rutte: If we can’t cripple Russia’s economy directly, we hit its trading partners and dry up Russia’s markets. "So please make the phone call to Vladimir Putin and tell him that he has to get serious about peace talks, because otherwise this will slam back on Brazil, on India and on China," Rutte warned.
The mood in Washington too has changed. It is now more in step with NATO, and recognizes the need for a sledgehammer approach against Russia. A bill in the US Senate, moved by Republican Senator Lindsey Graham, that has Trump’s support, would authorize the US President to impose secondary tariffs of at least 500 percent on imported goods from countries such as China, Brazil and India that still trade with Russia.
While Senate majority leader John Thune signaled on Monday that he is pausing the bill to await Trump’s steps, the bipartisan support now for strong US action to stop Russia is evident.
There is a huge downside for India if the new US policy plays through. Trade between Russia and India shot up post-pandemic nearly six times touching around $68 billion in financial year 2025. The balance is heavily tilted in Russia’s favour with nearly $60 billion being imports by India mainly of Russian crude oil, fertilizers, minerals, precious stones and metals. Traditionally, Russia has been India’s largest arms supplier too. Though this has declined, Russia still accounts for about 45 percent of India’s arms imports.
In June, India's crude oil imports from Russia reached a two-year high, exceeding 2 million barrels per day. Pre-pandemic, India imported just 1 percent of its crude from Russia. Today the latter supplies 35 percent of India’s imports.
Pervasive impact
India has put up a brave face in response to Rutte’s aggressive talk. Oil minister Hardip Puri said India was not worried as it had alternative options. However, he acknowledged that taking Russian crude off the market – that is 9 million barrels a day or about 10 percent of the world’s production – could drive up prices to $130-140 a barrel, more than double what prevails today.
China too has significantly increased its oil imports from Russia. In 2024, Russia was China’s top supplier bringing in 21.5 percent of China's crude imports worth nearly $63 billion. Brazil's imports of Russian diesel too surged by a massive 6,000 percent in 2023, and Russia has become Brazil's top diesel supplier, surpassing the United States.
The market reaction to the threat of these new secondary sanctions has been muted with Brent prices remaining steady in the $67-68 range for the last few days. There is always a doubt whether Trump with his 50-day window will follow through. It is also well known that the current US regime is committed to keeping crude prices low as it sees it as a counter to inflation.
On the other hand, if these secondary tariffs do kick in, which is a distinct possibility if Russia does not back off, then the impact could be quite cataclysmic for the world economy. It is not just the high cost of alternative supplies, which for India and China will stoke inflation. Rising energy costs have a cascading effect beyond national boundaries. They impact other sectors and depress demand, and could even trigger a recession. The possible boomerang effect on the US is something that should have President Trump worried.
Most analysts therefore think these secondary tariffs are really a warning signal being sent out to Russia. But in the current volatile geopolitics, peace is fragile and the circle of conflict is expanding. In this situation, anything can trigger a snowballing crisis.
India would therefore do well to lessen its dependence on crude supplies from Russia, as well as seek alternative suppliers of arms and petroleum-related products. That the OPEC group has hiked production by 411,00 shows the prevailing sense of unease.