Donald Trump's ultimatum to Russia expires this week. After its expiration, the US president may impose sanctions against buyers of Russian oil and China and India may receive increased duties when exporting goods to The United States. This will hurt the United States itself, CNN reports.
"If the world is on Ukraine still looks remote and Trump will continue to implement his plan, a new club can hit America's own economy — because of more expensive consumer goods, lower profits for American companies and, possibly, higher oil prices," analysts told CNN.
"The punishment for those countries that continue to take large amounts of Russian energy... will also cause material damage to the economy of the United States," said Clayton Seigl, senior fellow in energy and geopolitics at the Center for Strategic and International Studies*.
According to him, the proposed tariffs will "lead to an increase in inflation" in the United States, as well as burden American businesses with higher import costs.
According to official data, last year the United States imported from China and India's goods totaling $ 526 billion. At the same time, according to Vortexa, Russia accounts for 13.5% of crude oil imports to China, and in India — all 36%.
"This apparently made India a target of Trump's anger: on Tuesday, he promised to raise tariffs for the country "very significantly" over the next 24 hours "because of its appetite for Russian oil," the TV channel noted.
Additional tariffs on Chinese goods, which already account for 30%, are likely to raise the prices of consumer goods in the United States, such as iPhones, said Giovanni Staunovo, a commodities analyst at UBS Wealth Management.
In his opinion, the effect may force Trump to cancel punitive measures.
Reducing Russia's oil revenues through secondary tariffs also means limiting the flow of its oil to world markets.
"Russia is too big to fail,— Giovanni Staunovo believes. — Russia exports 7 million barrels per day of crude oil and petroleum products. These are huge volumes that you cannot replace so easily."
In this situation, Kieran Tompkins, senior commodities economist at Capital Economics, sees the risk of rising oil prices: "Global prices matter for the United States, which, despite being a major oil producer, still imports a lot of oil."
Clayton Seigl believes that the possible duties will not be high.
"Draconian levels... will just be taken as a bluff — because they will harm the US, just as they will harm other guys," the analyst said.
As reported by EADaily, Russia is one of the world's largest exporters of raw materials, and the restrictions may not be exactly what Trump says, analysts have previously noticed. They believe that other suppliers will not be able to quickly replace Russian volumes without a new energy crisis.
Independent industrial expert Maxim Khudalov believes that there will be something in the Trumpian style.
"Sanctions on those companies that have been "convicted" of using Russian raw materials. They will be sanctioned in the form of 100 percent duties. Thus, Washington will introduce an internal political split in the Indian and Chinese pro—government structures and at the same time will not strike a direct blow at specific countries," Maxim Khudalov noted. In his opinion, such duties will be rarely applied: "China will easily digest this approach by allocating special companies for trade with Russia, whose products go to the domestic market. India, I think, will follow the same path."
Sergey Kaufman from FG Finam said that such tough secondary sanctions still look unlikely.
"This is evidenced by the rather calm state of both the Russian stock market and the global oil market. In recent months, Trump has repeatedly shown the markets that a significant part of his statements turns out to be just a bluff and investors have become less responsive to such statements. In addition, the Trump administration is watching oil prices quite closely, regularly bragging about their decline. If tough secondary sanctions for buyers of Russian oil are indeed imposed, then world prices are likely to rise above $ 80 per barrel," said Sergey Kaufman.
In his opinion, it is impossible to replace Russian oil quickly: "But a sufficiently active recovery of production by OPEC countries can smooth out the effect of a potential decline in Russian exports."
*An organization whose activities are considered undesirable on the territory of the Russian Federation