Donald Trump Puts 100% Tariff Threat on Hold: What Forced the US President to Step Back?

New Delhi: US President Donald Trump has currently stopped the plan to impose additional tariffs of up to 100 percent on countries buying oil from Russia. This has brought great relief to India, because India is one of the major buyers of Russian crude oil. However, this relief is not permanent. According to US Secretary of State Marco Rubio, the Trump administration will assess the potential economic impacts of these sanctions and tariffs in the next 60 days. After this further decisions can be taken. 

Why did Trump suddenly change his decision?

Trump has issued an executive order to provide temporary relief on sanctions and tariff-related provisions related to Russia. This step was taken at a time when the deadline to impose additional duties on major countries purchasing oil from Russia was near. The US President has described this exemption as being in the national interest of his country. Under the new law, the way could be opened for imposing additional tariffs of up to 100 percent on goods coming to America from countries like India. At present this provision has been stopped from implementation. 

What will America investigate in 60 days?

Marco Rubio said President Trump wants to study the situation for 60 days to understand the potential impact of imposing sanctions and tariffs. In this, the effects on the American economy as well as the global market will also be assessed. The Russia-Ukraine war, the ongoing conflict in West Asia and disruptions in global energy supply could be important aspects of this review. According to Rubio, there are many simultaneous conflicts going on in the world that are affecting the energy market, so it is important to understand the broader consequences of the decision.

Why is this relief important for India?

India fulfils a major part of its needs through imported crude oil. Oil from Russia remains an important part of Indian energy supply. According to the Indian Express report, India imported about 1.9 million barrels of crude oil per day from Russia in September, which was more than 35 per cent of the total oil imports that month. In such a situation, the situation of imposition of an additional tariff of up to 100 per cent by America on the purchase of Russian oil could have become a serious challenge for Indian exporters. With the threat of tariffs averted for now, India has got time to consider its energy import and trade strategy. 

Has the threat of tariffs on India completely ended?

It is too early to say this at this time. The US administration has relaxed the relevant provisions rather than permanently abolishing them. This means that after review, there may still be an option to take stricter measures again depending on the circumstances. In the report, this decision has also been described as a temporary relief for India. According to the report, Indian refineries had already started cutting back on purchases of Russian oil and were instead spending more on purchasing oil from other sources. 

What will be the impact on India-US trade agreement?

With the threat of tariffs reducing, there may be some scope for trade talks between India and the US, but there is no certainty about the final agreement on the agreement. Differences remain between the two countries on market access, import duties and other trade issues. America has been wanting India to reduce energy purchases from Russia, while India takes oil import decisions keeping in mind the needs of its huge population and energy security. In such a situation, the American stance on Russian oil may affect bilateral trade relations in the coming days.

Can the pressure increase further?

The coming 60 days will be important for India. During this period, the US administration will seek a balance between the energy market, the domestic economy and a strategy to put pressure on Russia. India has certainly got relief for the time being, but for a permanent solution, clarity on issues related to trade talks and energy imports will be necessary. The next decision of the Trump administration will decide whether this relief lasts for a long time or the purchase of Russian oil once again causes tension in India-US relations.