Trump's sanctions against Russia damage to the US economy
Trump's sanctions against Russia damage to the US economy
This week US President Donald Trump set a new period to move Russia to peace in Ukraine: countries that continue to buy oil from Moscow are to be occupied with new tariffs. Trump's special sent in Steve Witkoff will travel to Russia on Wednesday before the deadline will run later this week, according to an official representative of the White House.
The effects on the US economy
If peace in Ukraine continues to turn out to be far and Trump implements its plan, the new measure could significantly burden the US economy according to analysts. Higher consumer prices, lower profit margins for American companies and possibly rising oil prices could be the consequences. Clayton Seigle, Senior Fellow for Energy and Geopolitics at the Center for Strategic and International Studies, noted: "The punishment of the countries that continue to receive large amounts of Russian energy would also noticeably damage the US economy."
Trump's customs plans and their effects
Trump had announced last month to raise twice as high tariffs of 100% on buyers of Russian oil if his Russian counterpart, Vladimir Putin, did not achieve peace with Ukraine within 50 days. This period has now been brought forward to this week. The tariffs would mainly apply to imports from India and China, which are not only important buyers of Russian oil, but are also among the largest trading partners in the United States. Last year, the United States imported a total of $ 526 billion from both countries.
Russia's role on the oil market
Both Asian countries have increased their purchases of Russian crude oil since the beginning of the full invasion of Ukraine by Russia in 2022, which meant that prices have fallen after western countries significantly reduced their imports of Russian oil. According to Vortexa, a data company for energy industry, Russia now accounts for 13.5% of China's crude oil imports - significantly more than before the war, where this share was only 7.7%. India now obtains more crude oil from Russia than from any other country and Russian oil 36% of the Indian market.
risks and challenges
Against this background, Trump indicated that he wants to raise the tariffs "very significantly" in order to combat India's demand for Russian oil. In particular, additional tariffs on Chinese goods could increase the prices for consumer goods in the USA, such as iPhones. Giovanni Staunovo, raw material analyst at UBS WEATTH Management, emphasized: "The US consumer would be upset about it." These concerns could lead to trump to cancel the punitive measures quickly after their introduction.The reaction to the oil market
An intervention in Russia's oil revenue caused by secondary tariffs could also inhibit the flow of oil in global markets, where prices are set. Staunovo argues that "Russia is too big to fail". Russia exports 7 million barrels of crude oil and sophisticated products every day that are difficult to replace. These global prices are also important for the United States, since the country still imports a considerable amount of crude oil despite its enormous oil production. The Brent oil price, an important benchmark, was traded over $ 65 per barrel on Tuesday.
If Trump actually introduces secondary tariffs, they could not be as high as he originally indicated. Seigle believes that much lower sentences from 10% to 30% would have "more weight" and countries could encourage countries to diversify their oil supply. "Draconian sentences are simply perceived as bluff - because they harm the USA as much as the other countries," said Seigle.
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