Trump’s calls for coordinated tariffs on India over Russian oil unlikely to sway EU
US President Donald Trump, before he dialled down the unseemly carping against India, has demanded that the European bloc and the G7 impose 100% tariffs on India—besides China—for the duo’s purchases of Russian oil. Washington, he said, would mirror such tariffs if they are imposed by Europe on the two countries.
It’s unlikely that any of this will happen.
Now, the reality is that in its dealings with New Delhi, Brussels has been stressing how much it recognises the urgency of a “strategic upgrade” with India, especially at a time of highly polarising US-China dynamic. What it wants is to put together coalitions that can break that divide, given it has to contend with Europe’s security and economic dependencies on the US, as well as its intricate and vast trade with China.
Even if the language they use isn’t always the same, Europe and India share many goals and prefer a Western-led global economic order to a China-led one.
The EU is India’s second-largest trading partner. More than a tenth of India’s total trade in goods is with European countries. There’s great potential for more.
To realize which, the European Commission and India are seriously engaged for narrowing differences holding up a long-negotiated free trade agreement. Its commissioner for trade and economic Security; interinstitutional relations and transparency, Maroš Šefčovič, was in New Delhi Friday for talks with commerce minister Piyush Goyal.
India can supply the unmet demand for skills in an ageing Europe. The fairly large number of mid-sized firms in Europe, in fintech and research especially, that are looking to scale up see India favourably. Partnerships are available also with Europe’s defence industry.
Trump has kicked up the fuss over coordinated 100% tariffs for India’s imports of Russian oil, in his typically petulant manner, most likely to heap pressure on India in its trade negotiations with White House that are set to resume, following the pause forced by India’s refusal last month to bend some of its red lines.
It’s the standard Trump playbook for bringing countries to the negotiating table. The White House may also be delineating its red lines and wants to make a bargaining chip of India’s Russian oil imports.
US ambassador-designate Sergio Gor, who is a close aide of Trump, expressed optimism at his confirmation Thursday over resolving the differences holding up the US-India trade deal in coming weeks.
But added in subsequent public utterances that Trump has made it “crystal clear” that the deal would be possible only once New Delhi ends all imports of Russian oil imports, which make up about 35% to 40% of India’s intake. The statements from US Commerce Secretary Howard Lutnick also indicate that this is a pre-condition for any deal.
White House has grown keen to see the Kremlin’s energy export revenues suffer. An indication of which is Japan’s decision to lower its price cap on Russian crude to $47.60 per barrel from $60 earlier, months after EU did the same in July as part of its 18th sanctions package against Moscow.
India, however, remains steadfast in delinking its Russian oil imports from trade negotiations with the White House. Hence, Trump’s move to mount pressure by calling for coordinated 100% tariffs on India by the G7 and EU.
Now, European leaders would very much like to see funding for the Kremlin’s war in Ukraine choked off, but won’t have Trump’s trade agenda hobble Brussels’ dealings with India; they will most likely parry his idea of tariff escalation.
The European playbook seems to be to get things done by massaging Trump’s ego. Its leaders dashed off to Washington to tell Trump that he had done well in Alaska, sidestepping his failure there to ensure a ceasefire in Ukraine after Russian President Vladimir Putin rebuffed his entreaties for ending the war. The sweet-talking ensured that Trump did not concede Kremlin’s conditions for peace.
Eight decades of US foreign policy towards US allies and rivals is in flux since Trump’s inauguration but, as a Western diplomat in Delhi put it, “Europe realises that White House can’t counter China on its own, and is dependent on EU…Therefore, there are negotiables.”
It is hoped that India has similarly identified its negotiables and non-negotiables for navigating criss-crossing negotiations in this Trumpian world.
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