Trump's relentless tariff strategy finally crashes into delicate geopolitical reality

Yahoo

4 days ago

President Donald Trump's relentless use of tariffs to coerce foreign counterparts into favorable deals is about to run headlong into the limits of geopolitical reality.
Trump's willingness to dramatically escalate the long-running US economic warfare in response to Russia's war on Ukraine is real, advisors say. His threat to accelerate sweeping tariffs on India is certain to come to fruition, they insist. But he also faces the backdrop of a looming deadline to extend a trade truce with the world's second-largest economy that requires a degree of caution as White House deliberations come to a head.
'He's pissed,' one person close to Trump said of his rapidly deteriorating view of Russian President Vladimir Putin in recent weeks. 'But he's also aware of the competing priorities here.'
Trump faces a unique challenge balancing all of his simultaneous demands: He is threatening punishing sanctions on the Russian energy production that serves as the financial linchpin of Putin's war machine at the same moment he is seeking leverage in trade talks with India while maintaining a fragile trade détente with China.
The convergence of conflicting priorities have driven intensive discussions inside the West Wing about the range and scope of the options Trump could trigger as soon as today – and put a significant amount of weight on the meeting between Putin and Steve Witkoff, his trusted foreign envoy, underway in Moscow.
Trump has threatened sweeping secondary sanctions on Russian energy that would primarily hit China and India, the two largest purchasers of Russian energy. But he's also considering more tailored options, including sanctions that target specific tankers – known inside the government as the 'shadow fleet' – that are utilized to skirt the existing Western sanctions regime in the transport of Russian oil, two US officials with the knowledge of the matter said.
The Biden administration's evolving sanctions actions found success in blacklisting the vessels critical to Putin's sanctions evasion efforts. Secondary sanctions tailored specifically to India in some form have also been discussed, the officials said.
Trump feels empowered to trigger the those secondary sanctions that were long weighed by his predecessor, but never deployed due to soaring inflation and concerns about a significant increase in domestic gas prices.
That is a problem Trump simply doesn't have right now, as waning global demand and a steady increase in output by the Organization of Petroleum Exporting Countries and their allies have mitigated the concern about the energy price spikes that bedeviled the Biden administration.
For the Trump administration, that has created leverage as frustration with Putin's refusal to come to the table has dashed Trump's envisioned quick end to the three-plus year conflict.
Breakdown in India trade talks
Those dynamics also played directly into the recent breakdown in long running and intense trade negotiations between the US and India, advisors say.
While there is obvious overlap between Trump's escalating threats targeting Russia and his explicit warnings about India's energy purchases, the dispute with the world's fourth-largest economy is specific to the trade talks, the officials say.
'We consider a wide range of options, but this is a situation more of convenient coincidence than overarching strategic long-game,' one of the officials said.
Trump has acknowledged as much.
'The sticking point with India is that tariffs are too high,' Trump said in an interview Tuesday with CNBC. Peter Navarro, Trump's senior counselor for trade and manufacturing, has called India as 'the Maharaja of tariffs,' underscoring a long-running view that India's expansive protection of its domestic markets has been a significant frustration for Trump and his trade team.
As the clock ticked toward Trump's August 1 'reciprocal' tariff deadline and foreign partners offered significant concessions on US market access, India was a notable exception, officials said.
'The president wanted deals that substantially opened markets – everything or near everything,' a senior administration official said. 'The were interested in opening some of their markets, but not nearly ambitious enough to meet the president's view of what would constitute a good deal.'
So while India's purchases of Russian energy and Russian military equipment was well known on the periphery, Trump elevated those friction points to the forefront as he sought to pressure Indian negotiators, the official said.
Russia complicates China deal, too
Any large-scale effort to trigger secondary sanctions, however, would crash directly into the delicate maintenance of US-China trade talks which have seen both countries utilize economic statecraft, sanctions and export controls to exert or ease pressure on the bilateral relationship over the course of months.
Treasury Secretary Scott Bessent warned his Chinese counterparts directly, during the third round of face-to-face talks last week, that Trump was serious about secondary sanctions and it was something Chinese officials needed to prepare for in the weeks ahead.
But as US and Chinese officials have quietly continued discussions over the technical details of an agreement to extend their existing trade truce, the concern about the impact secondary sanctions would have on those dynamics has been a factor inside the administration, officials say.
Trump has yet to officially sign off on an extension, even as his top advisors made clear it was only a matter of time before Trump blesses it.
For Trump, who has operated throughout his second term in a perpetual state of running deadlines, that clock is ticking concurrently with his deadline for Putin.
The decision on the latter now weighs heavily on the status of the former.