Minus to plus: how Trump's new duties will affect the Russian economy

Russia occupies a large volume of the oil export market to India and China, so it is unlikely that Asian partners will abandon our products, experts interviewed by Izvestia believe. On August 6, Donald Trump imposed additional duties of 25% against India for the purchase of raw materials, and also threatened China with additional fees for trade with Moscow. Against the background of a new round of trade war, the Brazilian president is holding a meeting with other countries to prepare a response from the BRICS. Why America needs new duties and what will happen to the global economy — in the Izvestia article.

Risks for Russia from Trump's new tariffs

Initially, Donald Trump imposed tariffs of 25% against India, but on August 6 he decided to raise them by the same amount due to deals with Russian oil. The American leader accused the country of buying large volumes of our raw materials and then selling them on the open market. In addition, Trump threatened to impose additional fees on Beijing for trade with Moscow.

Indian Prime Minister Narendra Modi, commenting on such a gesture by the United States, said he would not compromise and would defend the interests of local farmers and fishermen, even if he himself had to "pay a high price."

The trade turnover between Russia and India in 2024 amounted to an all-time record of $70.6 billion, and with China — almost $245 billion. However, according to the latest data from the PRC customs, the volume of trade between our countries in the first seven months of this year decreased by 8% to $125.8 billion. Despite this, it is unlikely that Asian partners will refuse to purchase our raw materials even under the threat of secondary sanctions, says Pavel Sevostyanov, associate professor of the Department of Political Analysis and Socio-Psychological Processes at Plekhanov Russian University of Economics.

— Russia occupies a fairly large volume of the oil import market to India. Its share, according to the latest OPEC review, is more than 40% (about 1.8-2.2 million barrels per day). The second reason is the composition of the oil. Indian oil refineries (refineries) are mainly focused on Russian export Urals," said Olga Belenkaya, Head of the Macroeconomic Analysis Department at Finam.

At the same time, a decrease in oil supplies to India is still possible, and the introduction of bypass schemes is also possible, which may lead to an increase in logistics costs and an expansion of the price discount for Russian exporters, the expert believes. This may mean a reduction in export earnings and oil and gas revenues to the budget of the Russian Federation.

The United States is currently negotiating with Asian countries to become their main supplier of oil and gas instead of Russia, said Chris Wright, head of the US Department of Energy. He added: the dialogue with India on this issue is still at an early stage.

Nevertheless, there remains a risk that the general terms of trade with partners will worsen amid pressure from the United States, said Vladimir Chernov, analyst at Freedom Finance Global. Both countries have already partially adapted to a similar scenario (after the introduction of secondary sanctions against Russia), and their internal political will in favor of cooperation with the Russian Federation remains, the expert added.

In addition, Vladimir Putin and Donald Trump are expected to meet next week. According to experts interviewed by Izvestia, the conversation between the two leaders may end with the first steps towards a truce. And this, in turn, will create conditions for the United States not to impose additional duties on Russian exports, said economist Andrei Barkhota. However, according to Vladimir Chernov, first of all, the presidents will discuss anti-Russian sanctions and the Ukrainian conflict.

How will the BRICS countries react to Trump's tariffs

The United States also intends to impose separate sanctions against the BRICS members — China, India and Brazil, the American permanent representative to NATO Matthew Whitaker said earlier. Moreover, Trump had already imposed import tariffs on all these countries.

The Brazilian authorities, in turn, intend to consult with experts from the World Trade Organization (WTO) on this topic. In addition, they want to meet with the leaders of India and China and discuss a joint BRICS response to the duties imposed.

Tariffs are not so much economic as political in nature. The White House punishes countries that demonstrate independence and strengthen ties with the BRICS format, which is perceived in the United States as an alternative to the Western world order. The Trump administration deliberately uses the policy of inflated tariffs as a way to encourage only those states that demonstrate a willingness to expand ties with the United States, says orientalist Leonid Tsukanov.

In response, the BRICS countries may consider mirrored tariff measures. China has already imposed duties of 10-15% on American agricultural products, coal and liquefied natural gas, and also applies non—tariff barriers such as export controls on metals and blacklists for companies from the United States. South Africa and Brazil, which depend on agricultural exports, could hit American farmers and machinery manufacturers.

However, retaliatory measures carry risks — a trade war could hit the BRICS countries themselves, especially China, which accounts for 73% of the BRICS countries' exports to the United States. The escalation also has the potential to disrupt global supply chains and cause price increases for consumers.

To reduce dependence on the United States, BRICS is looking for alternative markets. China, for example, reduced its purchases of American oil by 90%, switching to Canada. And Brazil, which exports only $40 billion worth of goods to the United States with a GDP of $2 trillion, may reorient supplies to Asia and Europe.

— In general, Trump's trade war is taking place in a one—on-one mode - he does not enter into agreements collectively. Consultations at the "USA —group of countries" level are hardly an acceptable format. Besides, BRICS is too diverse an association to work out a common solution, independent expert Andrey Barkhota is convinced.

What will happen to the global economy from the US tariffs

The large-scale duties announced in the spring against 70 countries came into force on August 7. The launch of tariffs will increase the fragmentation of the global economy, and this, in turn, will create a threat of slowing global trade, rising overall inflation and possible economic stagflation in a number of developing countries, says Vladimir Chernov of Finance Global.

The US president decided to impose duties in order to increase budget revenues and reduce the country's public debt, which, according to the latest data, has already crossed the $37.2 trillion mark. In addition, he wants to stimulate American manufacturers and exporters. Nevertheless, America will still suffer from its foreign policy — inflation in the country will rise, which will decrease consumer demand. Also, according to Olga Belenkaya from Finam, the profitability of the business will decrease.

However, there are more and more new statements by Donald Trump on tariffs. So, on August 6, he announced that America also intends to impose 100 percent duties on chips and semiconductors supplied to the country. Such an action could hit the entire global production chain, from the automotive industry to electronics, said Vladimir Chernov from Finance Global.

— American manufacturers risk an increase in the cost of components, which will reduce their competitiveness. This is especially sensitive for companies focused on Asian supplies, for example, from Taiwan or South Korea. At the same time, the global economy will receive another inflationary impulse," the expert believes.

In addition, the cost of electronics for American consumers will increase, Olga Belenkaya noted. However, an exception is still provided — those companies that decide to build semiconductor manufacturing enterprises in the country will be exempt from duties. For example, Apple announced that it would invest an additional $100 billion in American facilities, and Taiwan's TSMC is building several factories in the United States. Samsung and Intel have similar projects, the specialist said.

According to Vladimir Chernov, for Russia, the risks from duties against chips are rather indirect, as disruption of global supply chains may affect global demand, including for raw materials.