Trump gains a tariff weapon against China and India. Will he use it?

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President Donald Trump can now impose tariffs of up to 100% on countries purchasing oil from Russia, putting China and India squarely in the crosshairs.
The U.S. House on Wednesday passed a sweeping Russia sanctions bill, paving the way for Trump to tariff major purchasers of Russian energy.
The move comes close on the heels of the BRICS Summit, where Russian President Vladimir Putin and leaders from the Global South, including China and India, condemned unilateral economic sanctions and secondary sanctions, without naming the U.S.
All five top purchasers of Russian energy will be "extremely worried" about the potential application of this bill, said Deborah Elms, head of trade policy at Hinrich Foundation. The new statutory authority could give Trump the power to "strike hard and quickly at any time for any reason."
China and India would be most exposed, as both have leaned heavily into discounted Russian crude since the Ukraine war broke out in 2022, while the Iran war has further squeezed energy supplies. Neither China nor India were likely to cut back on Russian oil, though tariffs will give Washington leverage in dealing with New Delhi and Beijing, experts said.
"President Trump will sign this law and hold its tariff authority in reserve as an instrument of leverage," Ronak D Desai, visiting fellow at Hoover Institution, Stanford University, told CNBC. Nearly "a dozen House Republicans privately urged [the] leadership to strip the tariff provisions for fear of rising prices on the eve of the midterms," he added.
India is currently negotiating a trade deal with the U.S. and has been pressing Washington for a preferential rate compared to its competitors, while Chinese President Xi Jinping is set to meet with Trump later this month.
Following the Hormuz crisis, the combined share of Russian oil imports by India and China has increased to one-third from one-fifth, according to Kpler. China bought half of Russia's crude exports as of August-end, followed by India, which purchased 37%, Turkey 5% and the European Union 5%, according to the Center for Research on Energy and Clean Air.
Under current conditions, it would be "extremely challenging" for both countries to replace 3.5 million barrels per day of Russian seaborne supply, in addition to the roughly 600,000 bpd China imports via pipeline, Ivan Ryabov, head of oil trading analysis at Kpler, told CNBC.
Not upsetting Beijing
Washington is unlikely to raise tensions and upset Beijing ahead of next week's summit, while China is expected to shrug off efforts aimed at curbing oil purchases, according to analysts.
Beijing's tendency to push back against Washington's sanctions would also limit how far Trump's tariffs would go, said Martin Chorzempa, a Senior Fellow at the Peterson Institute for International Economics. Should the bill materialize, "China would certainly retaliate."
Echoing that sentiment, Dan Wang, China director at Eurasia Group, expects Beijing to defy any restrictions and continue its imports from Russia to prioritize energy security. Any meaningful pullback in Russian oil and gas imports could hurt China's energy security, which is "politically unacceptable," said Wang.
"It's unlikely that the U.S. will take any actions that could upset the apple cart," said Stephen Olson, a visiting senior fellow with ISEAS Yusof Ishak Institute.
Russia has remained China's largest supplier of oil and natural gas for years, accounting for about a fifth of China's crude imports and 10% of the country's natural gas consumption.
Washington could find use some "wiggle room" in the timing or scale of such tariffs, if any of them actually come into place, said Olson. Beijing, for its part, may issue a statement expressing its strong opposition to the bill, then "sit back and see what actually happens," he said.
On Wednesday, Ukraine's sanctions envoy said Russia could be forced to retreat from the war within six months if its oil revenues were halved, as he pressed governments across Asia to shut down loopholes letting Russian tankers and weapons components slip through the region undetected.
Anti-U.S. sentiment in India
India's foreign ministry responded to the passage of the Russia sanctions bill on Thursday, saying the country "remains firmly committed to ensuring energy security for its 1.4 billion people ... Government will work closely with Indian trade and industry bodies to deal with the implications of these developments."
Tariff prospects put India in a particularly difficult spot as it has yet to finalize a trade deal with the U.S. and is increasingly dependent on Russian crude supplies.
But experts told CNBC that India can neither afford to replace the barrels from Moscow, nor does New Delhi have the "political latitude" to do so under American pressure.
"The public mood [in India] against the U.S. has been turning negative," Harsh Pant, vice president of studies and foreign policy at the Observer Research Foundation, told CNBC, adding that the latest U.S. move of imposing tariffs will only "accelerate this process."
Following the Iran war, New Delhi replaced barrels from the Middle East mostly with supplies from Russia and some from Venezuela. As per Kpler data, Russian oil made up for more than 50% of India's crude purchases in June and July and over 40% in August.
"This time around, Washington's stated expectation is that it wants India to stop Russian oil imports, directly or indirectly," said Arpit Chaturvedi, South Asia advisor at strategic advisory Teneo. This will "impact India's economic choices and would be a difficult ask to comply with for New Delhi," he added.
The U.S. had imposed a 25% punitive tariff on India last August for buying Russian oil, raising the duties on imports from New Delhi to 50%. In February, duties were reduced to 18%, with Trump claiming India had "agreed to stop buying Russian Oil, and to buy much more from the United States and, potentially, Venezuela."
New Delhi, however, has not endorsed the details shared by Trump and maintains that ensuring energy security is the sole driver of its energy purchases.
"The risk of additional U.S. tariffs on India – either in the immediate future or sometime down the road – poses an obstacle to concluding the bilateral trade agreement," Atman Trivedi, partner at Washington-based DGA Albright Stonebridge Group, told CNBC.
While the legislation provides the president with a new sanctions tool, he has the option of choosing whether or not to use it, Trivedi said, adding that the bill contains exceptions in certain circumstances.
The Indian government is likely to "quietly seek confirmation" from the White House whether it could be eligible for an exemption, he said.

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