Tariffs don't decide wars

The new law will not end Ukraine conflict

United States (US) President Donald Trump last week signed into law a Bill passed by Congress, giving him the powers to, among other things, impose up to a 100 per cent tariff on all goods imported from the five largest importers of Russian oil and gas. The implicit assumption behind what is called the Lindsey O Graham Sanctioning Russia and Iran Act of 2026 is that deterring buyers of Russian energy will cut Moscow’s earnings and eventually compel it to end the war in Ukraine. The war in Ukraine is in its fifth year and must end. But imposing tariffs on other countries is unlikely to change realities on the battlefield. Any reduction in Russian energy supply at this point will only complicate the global economic and geopolitical environment. One reason some of the largest energy importers, including India, now depend on Russian energy is the ongoing, ill-conceived conflict in West Asia, initiated by the US.

 

However, irrespective of the facts on the ground, India needs to be careful. It is worth recalling that the Trump administration imposed additional tariffs on India for importing Russian oil in 2025, which it removed only early this year. The US did not impose such tariffs on China, which is by far the biggest importer of Russian energy and has a much deeper economic engagement with Moscow. The basic reason for this was China’s ability to retaliate. India does not have much leverage. Therefore, theoretically, there is a possibility that, armed by the new law, Mr Trump may again impose additional tariffs on India as a symbolic act for his constituency. Such tariffs did not end the Ukraine war in 2025 and will not do so in 2026 on their own. According to reports, Russian oil accounted for about 45 per cent of India’s oil imports in August. The share was higher in the preceding months.

 

It is also possible that the new law will be used as leverage in the ongoing negotiations for the India-US trade deal, forcing the Indian side to open up its market more than it has been willing to do so far. The law provides that the President can waive the requirements in the national interest. The Indian side must convey its position clearly.  A fair and balanced trade deal will help both economies and provide some certainty to the trade relationship. However, it is worth pointing out that concessions and commitments by trading partners often result in more such demands by the US. It must also be clearly communicated that the Indian government has a responsibility to ensure energy security for the country and its rapidly expanding economy.

 

In pure economic terms, any significant reduction in imports of Russian energy by large consumers may have a disproportionate impact on global oil prices, which have increased significantly over the past few weeks. Not only has the US-initiated war in West Asia blocked the Strait of Hormuz, but the region’s other supply routes too are under pressure. A significantly higher oil price will affect the global economy, including the US, which is struggling to bring down the inflation rate. In fact, it is for the US to first end its expedition in West Asia. That will help bring some order to the global energy market. Further, US lawmakers need to debate whether their government has done enough to protect Ukraine or help find a solution to the conflict. There have been some efforts in recent weeks, but there is still no certainty in sight. Passing the sanctions Bill may have symbolic value for the US electorate, but it is certainly not the best instrument for a superpower to justify its position.