In an effort to put an end to the Russian-Ukraine conflict, US President Donald Trump has threatened to impose new sanctions on Russia and additional sanctions on nations that purchase Russian crude oil.
Trump imposed an additional 25% tariff on India’s goods earlier this month, citing the country’s continued imports of Russian oil, but he has not instituted similar punitive measures against China, the country’s largest energy buyer, in an effort to increase its imports.
Why, then, has the Trump administration increased pressure on India to stop purchasing Russian oil despite not intervening to stop it?
How does Trump want to stop Russian oil from being purchased, and who is doing it?
China imported a record 109 million tonnes of Russian oil last year, accounting for nearly 20% of its total energy imports, according to Chinese customs data.
In contrast, India imported 88 million tons of Russian oil in 2024.
China has undoubtedly been Russia’s main economic ally, leading to accusations that Beijing is indirectly assisting Moscow in its fourth-year conflict with Ukraine.
According to what it is known, US lawmakers from both major political parties are pushing for the 2025 Sanctioning Russia Act, which would apply to any nation that purchases Russian oil and natural gas.
Trump would be able to impose 500 percent tariffs on countries that are perceived to be aiding Russia under the proposed legislation. Apparently, US senators are awaiting Trump’s consent to move the bill forward.
What justifications does Trump give for avoiding new tariffs on China?
After failing to reach an agreement on a Russia-Ukraine ceasefire last week, Trump was questioned by Fox News on August 15 about whether he and Russian President Vladimir Putin were considering placing additional sanctions on Beijing.
We don’t need to think about that right now, he said, but I might have to do it in two or three weeks or something.
Observers believe that Trump is allowing for extensive trade negotiations involving rare earth minerals.
Rare earths ; are a group of 17 components essential to numerous manufacturing sectors, ranging from automotive parts to clean energy and military technology. Rare earth minerals are traditionally mined and processed in China.
They continue to be a key topic in ongoing trade negotiations because many US industries rely heavily on Chinese minerals.
Trump has other reasons to prefer India to China. He wants to avoid a tariff increase in particular as Chinese goods are being stockpiled in US stores ahead of December’s Christmas holiday season.
Trump, for his part, has taken steps to lessen recent trade friction. A significant demand from China was eased by the US earlier this month by lifting some of its export restrictions on advanced semiconductors.
Even though the tech giant would have to pay the federal government 15% of its China sales as a result, Trump granted the US company Nvidia permission to sell advanced chips to China on August 11. Trump had previously halted the transaction.
US Treasury Secretary Scott Bessent defended Washington’s decision to halt China’s use of secondary sanctions, saying that it had purchased 13 percent of Russian oil prior to the Ukrainian conflict, which has since grown to 16 percent. He claimed that China’s oil has a diverse input.
He continued, noting that China had not engaged in India’s “arbitrage.”
However, Bessent accused India of being a “profiteer”. He made the point that less than 1% of Russian oil was imported by India before the conflict in Ukraine. However, he claimed, “I now think it’s up to 42 percent.” He told CNBC, “This is what I would call the Indian arbitrage: buying cheap Russian oil and selling it as a product.”
Some of India’s richest families are said to have made an additional $16 billion in profits. ”
Peter Navarro, a senior official in the Trump administration who previously accused India of funding Russia’s war in Ukraine, was appointed on Monday as such. The White House’s deputy chief of staff, Stephen Miller, stated earlier this month that New Delhi’s purchase of Russian crude was “unacceptable.”
What have other government officials said?
Trump did not respond on August 12 when US Vice President JD Vance suggested otherwise. Washington had earlier announced an additional 25% tariff on India’s imports over its continued purchase of Russian oil.
The president acknowledged that he was considering it, but he hasn’t made any firm decisions because our relationship with China only has an impact on a number of things that are unrelated to the Russian situation, according to Vance.
US Secretary of State Marco Rubio earlier this week warned that if China were to rely on US refineries to reduce its oil prices, energy prices could rise.
Rubio said, “Let’s say you were to leave a country after the oil sales of Russian oil to China,” in an interview with Fox News on Monday. China is only going to refine that oil, I suppose. Anyone who purchases that oil would pay more for it once it is sold onto the global market. ”
Beijing’s embassy in Washington also stated that international law applies to trade between China and Russia.
According to Liu Pengyu, the embassy spokesman, “The international community, including China, has normal cooperation with Russia within the framework of international law,” on July 6, the embassy said.
What impact would higher tariffs have on the economies of the US and China?
A ceasefire agreement in Ukraine and the reduction of sanctions against Russia would strengthen China’s economy and improve international stability, not least of which given the recent subdued economic data released in July.
China’s economy slowed last month as factory activity, investment, and retail sales decreased from June, suggesting that the effects of Trump’s tariffs are still felt.
In another area, the youth unemployment rate in China increased to its highest level in 11 months in July, with the urban jobless rate rising for those between the ages of 16 and 24 excluding students. 8 percent – up from 14. in June, 5%.
According to Alicia Garcia Herrero, chief Asia-Pacific economist at Natixis in Hong Kong, “cracks are starting to show [in the Chinese economy] and the overall picture is not great.”
She continued, adding that Chinese banks and companies have been making preparations for secondary sanctions for a while. Under the [Joe] Biden administration, they had already begun to worry about this. ”
Beijing has increased its efforts to diversify trade routes and produce more strategic products domestically, according to Garcia Herrero, making China’s economy “harder to strangle through elevated or secondary sanctions.”
Higher tariffs, she said, would raise inflation for American consumers in addition to the high level of goods imports from China to the US, she said. ”
The US’s trade deficit with China reached $ 295. 4bn, marking a 5. 8 percent rise from 2023.
How is US-China’s trade currently doing?
The US and China avoided a 90-day trade war by extending a previous tariff pause on August 12 and avoiding a full-fledged trade war. With the extension, all other aspects of the truce were still in place, with the exception of the US’s continued to impose higher tariffs on China.
On May 11, the two parties consented to their first tariff pause.
China and Beijing both received tariffs in April that equate to a virtual trade embargo while Beijing also applied a reciprocal tariff of 125 percent to the US.
According to US Census Bureau data, China and high tariffs caused the US trade deficit to narrow to its narrowest level since 2004 in June. US-China trade gap decreased by $ 22. from March to August, 2 billion. That is a 70% decrease over the previous year.
However, the Geneva, Switzerland-based tariff truce temporarily reduced US import taxes to 30% while Chinese export duties to 10%. Additionally, Beijing agreed to resume some exports of rare earth.
