Trump Tariff Threat Could Leave Russia With Few Options

Russia would be dealt a painful blow if countries that import its oil were to halt their purchases in response to US President Donald Trump’s threat to impose “secondary tariffs” on them. India — a major buyer of Russian crude oil — became the first country to face the prospect of a hefty additional tariff on all of its exports to the US this week, as Trump sought to ramp up pressure on Moscow to end the war in Ukraine. If key customers stop buying its crude, Russia would have three main options: offer bigger price discounts to lure them back, cut production or try to find new customers. However, under any of these scenarios, the country’s oil producers and government budget revenues would take a substantial hit, adding to the growing economic strains in Russia. Government officials and oil companies in Russia are not commenting in public about this latest potential threat to energy exports, beyond repeating the familiar line that the country’s economy has withstood various sanctions so far and will continue to do so. Analysts say that if the US seeks to ramp up pressure on Russia’s energy customers, Moscow will likely take further steps to conduct its business in the shadows. They point, for example, to sanctioned Iranian crude, which is covertly exported to China under a “made in Malaysia” label. China is the other big importer of Russian crude, but so far it has not faced the same kind of pressure from Trump to halt its imports and cut off revenues that help fund Russia’s war effort in Ukraine. The production and export of oil and gas are a crucial pillar of the Russian economy and its public finances. Russia currently produces more than 10 million barrels per day of crude oil and condensate, but needs only about 5.4 million b/d for its own consumption. Exports to India and China have soared as a result of Western sanctions, with those two countries accounting for over 80% of Russia’s total crude exports.