The U.S. House passed a bill Wednesday letting President Trump impose tariffs of up to 100% on the top buyers of Russian oil, putting China and India directly in his sights. Neither country is expected to cut back on Russian crude, but analysts say the threat hands Washington new leverage over Beijing and New Delhi.
President Donald Trump can now tariff up to 100% of the value of goods from countries that buy Russian oil, after the U.S. House on Wednesday passed a sweeping Russia sanctions bill. China and India, the two largest purchasers of discounted Russian crude, are squarely in the crosshairs.
The bill arrives days after the BRICS Summit, where Russian President Vladimir Putin and leaders from the Global South, including China and India, condemned unilateral economic sanctions without naming the U.S. directly. Yet experts say Washington is unlikely to force the issue immediately.
A tool held in reserve
All five top purchasers of Russian energy will be extremely worried about the bill, said Deborah Elms, head of trade policy at Hinrich Foundation. According to CNBC, the new authority could give Trump the power to "strike hard and quickly at any time for any reason."
China and India have leaned heavily into discounted Russian crude since the Ukraine war began in 2022, and the Iran war has squeezed supplies further. Neither is likely to pull back, but tariffs will give Washington leverage in dealing with both governments, experts told CNBC.
China bought half of Russia's crude exports as of the end of August, followed by India at 37%, Turkey at 5% and the European Union at 5%, according to the Center for Research on Energy and Clean Air. Following the Hormuz crisis, the combined share of Russian oil imports by India and China rose to one-third from one-fifth, according to Kpler.
Replacing that supply would be difficult. It would be extremely challenging for both countries to replace 3.5 million barrels per day of Russian seaborne supply, plus roughly 600,000 barrels per day China imports via pipeline, said Ivan Ryabov, head of oil trading analysis at Kpler.
Washington treads carefully with Beijing
Washington is unlikely to raise tensions with Beijing ahead of next week's summit, and analysts expect China to shrug off pressure to curb its oil purchases. Beijing's tendency to push back against sanctions would also limit how far the tariffs go, said Martin Chorzempa, a senior fellow at the Peterson Institute for International Economics, adding that China would retaliate if the bill materializes.
Russia has remained China's largest oil and gas supplier for years, accounting for about a fifth of China's crude imports and 10% of its natural gas consumption. Washington could find wiggle room in the timing or scale of any tariffs, said Stephen Olson, a visiting senior fellow with the ISEAS Yusof Ishak Institute, who expects Beijing to voice opposition and then wait to see what actually happens.
India's difficult position
India's foreign ministry said the country remains firmly committed to ensuring energy security for its 1.4 billion people and will work with domestic trade bodies on the implications. New Delhi is still negotiating a trade deal with Washington and has grown increasingly dependent on Russian crude.
Russian oil made up more than 50% of India's crude purchases in June and July and over 40% in August, according to Kpler. The U.S. had imposed a 25% punitive tariff on India last August over its Russian oil purchases, pushing total duties to 50%; those duties were cut to 18% in February, with Trump claiming India had agreed to stop buying Russian oil and to buy much more from the U.S. and, potentially, Venezuela. New Delhi has not endorsed that account.
The risk of new tariffs poses an obstacle to finishing the bilateral trade agreement, said Atman Trivedi, a partner at Washington-based DGA Albright Stonebridge Group. Trump can choose whether to use the new authority, and the bill includes exceptions in certain circumstances, Trivedi added — leaving India likely to quietly seek confirmation from the White House on whether it might qualify for one.
Source: CNBC
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