Trump tantrums: Another deadline hangs heavy on India

Last week, when India failed to strike a trade deal with the US by the August 1 deadline, US President Donald Trump announced 25% tariff on India. This week another deadline hangs heavy on India as Trump brandishes secondary sanctions on buyers of Russian oil, mainly India and China.

India has been a target of Trump for weeks now because of its economic ties with Russia. He has given Russian President Vladimir Putin until August 8 to reach a truce with Ukraine, and wants to ramp up the pressure by targeting energy purchases from countries like India and China that are helping to keep Russia’s economy afloat. India, however, is defiant so far, arguing it’s being unreasonably singled out when the US as well as the EU continue to import goods from Russia.

Trump has threatened to hit Russia with new sanctions and impose 100% tariffs on countries that buy its oil unless Putin agrees to a ceasefire in Russia's war in Ukraine.


Also Read: India braces for pain as Trump gives 24-hour warning on tariffs

Is Trump moderating his stance?

Last month, Trump threatened sanctions on buyers of Russian exports unless Russia agreed to a peace deal, a major policy shift brought on by frustration with Russia's ongoing attacks on Ukraine.

Throughout the more than three-year-old war, Western countries have cut most of their own financial ties to Moscow, but have held back from taking steps that would restrict Russia from selling its oil elsewhere. That has allowed Russia to continue earning hundreds of billions of dollars from shipping oil to buyers such as China and India. "We're going to be doing secondary tariffs," Trump said last month. "If we don't have a deal in 50 days, it's very simple, and they'll be at 100%." Later, he shortened his 50-day deadline to 10-12 days and it is set to expire this week.

However, Trump yesterday said he never mentioned a percentage for Russian oil sanctions. "I never said a percentage, but we'll be doing quite a bit of that. We'll see what happens over the next fairly short period of time... We have a meeting with Russia tomorrow. We're going to see what happens," he said.

By walking back his own earlier statement, Trump appears to be moderating his stance as diplomatic efforts for on. His foreign envoy Steve Witkoff has landed in Moscow in a last-ditch effort to avoid the new sanctions, following an escalation in rhetoric between Trump and Russia over risks of nuclear war. On Monday, Russia said it was no longer bound by a moratorium on short- and medium-range nuclear missiles.

Will Putin stay put?

Putin is unlikely to bow to a sanctions ultimatum expiring this Friday from Trump, and retains the goal of capturing four regions of Ukraine in their entirety, sources close to the Kremlin told Reuters. Putin's determination to keep going is prompted by his belief that Russia is winning and by scepticism that yet more U.S. sanctions will have much of an impact after successive waves of economic penalties during 3-1/2 years of war, according to three sources familiar with discussions in the Kremlin.

The Russian leader does not want to anger Trump, and he realises that he may be spurning a chance to improve relations with Washington and the West, but his war goals take precedence, two of the sources said. Putin's goal is to fully capture the Ukrainian regions of Donetsk, Luhansk, Zaporizhzhia and Kherson, which Russia has claimed as its own, and then to talk about a peace agreement, one of the sources said.

Trump, who in the past has praised Putin and held out the prospect of lucrative business deals between their two countries, has lately expressed growing impatience with the Russian president. He has complained about what he called Putin's "bullshit" and described Russia's relentless bombing of Kyiv and other Ukrainian cities as "disgusting".

The first source told Reuters Putin was privately concerned about the recent deterioration of US ties. Putin still retains the hope that Russia can again befriend America and trade with the West, and "he is worried" about Trump's irritation, this person said.
But with Moscow's forces advancing on the battlefield and Ukraine under heavy military pressure, Putin does not believe now is the time to end the war, the source said, adding that neither the Russian people nor the army would understand if he stops now.

Trump's sanctions threat was "painful and unpleasant," but not a catastrophe, the second source said. The third source said there was a feeling in Moscow that "there's not much more that they can do to us". It was also not clear if Trump would follow through on his ultimatum, this person said, adding that "he's made threats before" and then not acted, or changed his mind.

India braces for more tariffs

While the 25% tariff is likely to shave 20 to 30 percentage points from India's GDP growth as per various experts, further punitive tariffs for buying Russian oil can have a far greater impact on India's economy.

Foreign exchange reserves fell to $688.9 billion as of August 1, Reserve Bank of India Governor Sanjay Malhotra said on Wednesday. The forex reserves fell $9.3 billion compared to the previous week, which economists said reflects the central bank's defence of the rupee amid tariff-related uncertainties, as per a Reuters report. Detailed data on forex reserves will be released later this week. The rupee slid 1.18% against the dollar in the week through August 1, marking its sharpest weekly decline in nearly three years.

India's response so far has been defiant even as it continues to talk to the US. India appears to be betting on Trump’s volatility, hoping he will moderate his stance against India in view of the November 2025 US elections. However, further secondary sanctions -- which can wreak heavy damage to textiles, engineering, seafood, chemicals and leather sectors and also lead to job losses -- might narrow India's strategic space and force it in a corner. The government is already planning to shield more vulnerable sectors from the tariff impact in various ways.

(With inputs from agencies)