Washington /New Delhi, August 7: U.S. President Donald Trump has announced sweeping new secondary tariffs targeting countries trading with Russia, aiming to choke off Moscow’s revenue streams unless a ceasefire with Ukraine is reached by August 8.
India has become the first country to be penalised, with an executive order raising tariffs on Indian imports to 50% following its continued purchase of Russian oil. If the order is fully implemented in 21 days, all goods from Russia’s trading partners could face 100% import duties in the United States.
“Trade is great for settling wars,” Trump said last month, as he defended the aggressive new approach that risks roiling global supply chains and inflaming tensions with allies and adversaries alike.
The move comes as Russia—despite being the most heavily sanctioned country in the world—continues to finance its war effort in Ukraine through energy exports. Russia remains the world’s third-largest oil producer, with China, India, and Turkey among its top buyers.
India First in Firing Line
Trump’s executive order specifically singled out India for a 25% additional tariff hike on top of existing 25% duties. India has emerged as the second-largest buyer of Russian oil since the Ukraine invasion in 2022, prompting criticism from the U.S. administration.
“They’re fuelling the war machine,” Trump said in an interview with CNBC. “And if they’re going to do that, then I’m not going to be happy.”
The higher tariffs could make Indian exports such as smartphones more expensive in the U.S. Apple, for example, has shifted significant iPhone production to India, much of it destined for the American market.
Global Ripple Effects
Trade analysts warn that the economic fallout could be significant. The tariffs are designed to make products from countries trading with Russia too expensive for American importers, thereby pressuring those countries to cut ties with Moscow.
Kieran Tompkins of Capital Economics said the primary channel of impact would be through higher energy prices, as reduced Russian oil supply could drive prices upwards. While U.S. oil production is at record levels, Tompkins noted that the OPEC+ bloc still has considerable spare capacity that could mitigate major price spikes.
Trump’s sanctions strategy also relies on compliance enforcement. Russia’s “shadow fleet” of tankers and complex sanction-evasion networks may challenge the effectiveness of the new measures.
Implications for China, EU, and Russia
China, the largest buyer of Russian oil, may be a harder target. U.S.-China trade is far deeper than with India, and analysts warn that extending secondary sanctions to Beijing could derail ongoing trade negotiations and stoke fresh inflation in the U.S.
“This type of over-escalation is unlikely to impress the Chinese,” said Simon Evenett, trade expert at IMD Business School. “It would be very difficult to peel the Chinese away from the Russians without a good reason.”
The European Union and Turkey—both significant importers of Russian energy—could also be affected. EU officials, who already face a 15% tariff under new U.S. trade terms, fear the secondary sanctions could further hamper transatlantic commerce. Key EU exports like pharmaceuticals and machinery could become more expensive in the U.S. market.
Russia’s Economic Pressure
Russia’s economy, which grew 4.3% last year, is now showing signs of strain. Economy Minister Maxim Reshetnikov warned recently that the country was “on the verge” of recession, as Western sanctions bite and defence spending surges to Cold War-era levels.
The International Monetary Fund forecasts just 0.9% growth for Russia this year. About a third of Russia’s federal budget is funded by oil and gas exports, which have been declining.
By targeting that revenue, Trump hopes to curb Russia’s capacity to finance its war in Ukraine. “If they can’t sell oil, they can’t buy bullets,” one senior U.S. official said.
The new tariffs add another layer to the Trump administration’s economic warfare strategy and mark a renewed effort to end the conflict in Ukraine by leveraging global trade.
