Donald Trump says he wants to stop Vladimir Putin's 'war machine' but his sanctions–tariffs combo could backfire

Australia Broadcast Center

4 hours ago

Donald Trump is searching for a way to end the bloodshed in Ukraine and the US president's latest plan involves combining two of his favourite punishments: more sanctions, more tariffs.
This time, it's where they're going — far from the front lines — that's important. And some analysts are warning it could backfire.
After weeks of bluster, things got real on Wednesday with an executive order for an additional 25 per cent levies on all US imports from India.
Combined with the 25 per cent "reciprocal" tariff announced last week, it becomes a 50 per cent tariff on a country Trump said was fuelling the "war machine" by buying billions of dollars of Russian oil.
The White House has flagged more announcements in the coming days.
Trump is trying to dig an economic hole around Moscow so big it forces his counterpart there, Vladimir Putin, back to the negotiating table.
It's a simple strategy. Measures designed to hurt Russia's finances that have been in place for years will effectively be expanded to include those who line the Kremlin's pockets.
India and China have already been singled out for what's known as secondary sanctions.
Combined with new tariffs, like those announced on Wednesday, the US could end up being the one that pays the price.
Russia has already been subjected to a multitude of penalties imposed by Western governments, including Australia, and their allies, before and after its full-scale invasion of Ukraine.
Moscow's banks are blocked from accessing global financial markets. Oligarchs' assets abroad are frozen. Many countries have shunned trade.
All this was designed to stop Putin's ability to fund his military.
And yet, more than three years later, it continues to fight.
It's become clear that ending the war will take something more. That's where the US president's new plan comes in.
India's external affairs ministry released a statement on Wednesday calling the extra tariffs "extremely unfortunate" and warning the country would "take all actions necessary to protect its national interests".
Michael O'Kane is a senior partner at London's Peters&Peters law firm and the co-founder of the Global Sanctions website, which tracks the latest developments in this space.
He's sceptical about the effectiveness of secondary sanctions, because the West "continually underestimates Russia's ability to pivot and evade any new measures that are being put in place".
"And I don't see any reason why that isn't going to continue."
One of the main ways the Kremlin does this is by exporting its oil via a so-called "shadow fleet" of ships.
It's estimated this force comprises around 1,400 aging tankers that supply a black market of exports and evade the West's naval net with flags of convenience and convoluted ownership structures.
"We now have an under-the-radar network of vessels, agents and brokers who are engaged in this activity," O'Kane says.
"The two main buyers are India and China, and they are hugely complex, enormous economies where there's a great deal of difficulty in putting some kind of stranglehold on them."
Trump's sanctions/tariffs combination will have different repercussions for China, India and Russia, but experts say the US will be affected too.
India's new 25 per cent levies are set to begin in 21 days, while previously announced 25 per cent tariffs will come into effect on Thursday.
It means by the end of the month, New Delhi will face some of the highest levies on exports of all the US's trading partners.
"With such obnoxious tariff rates, trade between the two nations would be practically dead," Madhavi Arora, an economist at Emkay Global, told the Reuters news agency.
While that will hurt India more than the US, slapping new taxes on an important strategic partner could cause significant geopolitical consequences for Washington.
"The United States security competition with China in the South China Sea and down into the Indian Ocean is a matter of significant concern to the White House," O'Kane says.
"They need to have formidable allies. That's why we've seen this AUKUS arrangement being set up, it's all with the view of being able to contain China from a security perspective.
"India plays an important role too, and it would seem to me as though taking action against India at this stage could undermine this effort."
While India has begun to learn its fate, new US tariffs and secondary sanctions on China — a superpower with which it is currently locked in trade negotiations — haven't yet been revealed
Beijing also welcomes Russia's oil, and immunity from Trump's wrath appears unlikely.
Dr Patricia M Kim is a fellow at the Brookings Institution's Centre for Asia Policy Studies and John L Thornton China Centre.
"It's hard to imagine Beijing would publicly side with Washington against Moscow or appear to bow to American pressure by cutting purchases of Russian oil," she says, adding any new tariffs announced by the White House would have consequences for Beijing and "deal a blow to Chian's export-driven sectors, especially those heavily reliant on the US market".
"But it would hurt the US as well."
Unlike its trade relationship with India, the US imports masses of cheap electronics and consumer goods from China's manufacturing hubs — all of which could become a lot more expensive for Americans already complaining about the cost of living.
It also relies on rare earths from China, which accounts for almost 70 per cent of global production, to build things like planes, missiles and cars.
Earlier this year, the US got a taste of how Beijing reacts to being targeted, when a suite of new tariffs were met with swift reciprocal measures.
The world's two largest economies got into the ring, and while they've temporarily stopped throwing punches, the White House has hinted this week it may start again.
Trump's new plan to try and put pressure on Russia may seem straightforward, but it could pave the way for a new reality after the guns fall silent in Ukraine, and some will find it frightening.
Russia exploiting its new, lucrative black market. India cosying up to the Kremlin. And a disrespected China searching for new ways to punish a country that can't do without its wares.