U.S. diverges on penalties for India and China in their acquisitions of Russian oil
In a complex dance of global trade, the US and China have agreed to extend a tariff pause until November, lowering US duties on Chinese goods to 30% and Chinese levies to 10%. This move comes amidst a delicate balance of economic pressures and geopolitical tensions.
The US administration, under President Donald Trump, has imposed a 50% tariff on Indian goods, citing New Delhi's continued reliance on Russian crude. Washington argues that Indian refiners are reselling Russian oil products abroad, generating billions in windfall profits. However, India's oil purchases from Russia stand at 88 million tons, a sudden surge from less than 1% before the war, which has triggered US accusations of "profiteering."
On the other hand, China continues to buy Russian oil on a large scale, importing a record 109 million tons in 2024, accounting for about 20% of its total energy needs. Despite this, no specific figures are available for the current 2024 import volume of Russian oil by China in tons.
Officials concede that sanctioning China would carry global costs, such as raising global energy prices and feeding inflation. This is a concern shared by both the US and China, with US consumers remaining sensitive to import-driven inflation and China's economy showing strain from weak factory activity and rising youth unemployment.
Trade talks are underway between the US and China, and Washington is wary of jeopardizing supply chains. The US administration has offered concessions, such as easing chip export curbs and approving Nvidia's sales of advanced semiconductors to China.
Alicia Garcia Herrero, chief Asia Pacific economist at Natixis, stated that both the US and China need some positive news as neither trusts the other, but both face economic challenges. The tariff pause reflects the mutual need of both countries, underscoring the intricate dance of global trade and geopolitics.
Despite the US's pressure on India over Russian oil, it appears that China remains shielded by its leverage in trade and critical minerals. The US President Trump has threatened new sanctions on Russia for buying its oil, but has so far avoided escalating against China, despite calls for sweeping secondary sanctions.
As the global economy navigates these complexities, it remains to be seen how the tariff pause and ongoing trade talks will shape the future of US-China relations and the global trade landscape.
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