Coercive Commerce

U.S. President Donald Trump’s trade policy latest tariff escalation, backing legislation that threatens tariffs of up to a staggering 500 per cent on countries buying Russian oil, is nothing but economic coercion dressed up as moral outrage with India emerging as its most exposed target.

The proposed Sanctioning Russia Act of 2025, championed by Senator Lindsey Graham and now greenlighted by Trump, is intended to cripple Moscow into halting the Ukraine war by punishing its customers. Any country importing Russian oil, gas or uranium could face tariffs so extreme that they would amount to a de facto trade embargo. But at 500 per cent, the goal seems to be to obliterate commerce altogether.

Following the announcement, India’s benchmark indices already slid sharply as investors digested the prospect of a sudden, politically motivated rupture in trade with America. India exports more than $120 billion worth of goods and services to the United States each year. A tariff wall of this height has the potential to deliver a mortal blow to this trade.

The moral argument advanced by Washington is that cheap Russian oil finances Vladimir Putin’s war in Ukraine. Punish buyers and starve the Kremlin. Yet morality, like tariffs, is being applied unevenly. China buys more Russian crude than India does, yet has so far escaped punitive action. The reason being American officials fear that retaliation from Beijing could involve restrictions on rare-earth exports - materials critical to American defence and high-technology industries. India poses no such threat, making it the safer target.

This selectivity undermines the very premise of a rules-based order as principle is replaced by convenience. Graham’s own language is revealing. The bill, he says, would give Trump “tremendous leverage” over countries like India and Brazil. Leverage, and not legality, is the organising idea here. Duties of up to 50 per cent are already in place on Indian goods, among the highest levied on any major economy. The new proposal would multiply that damage tenfold. Trade analysts warn that such tariffs would effectively halt Indian exports to the United States, extending even to services by taxing American firms that pay for Indian IT, consulting and back-office work.

The contradictions are glaring. Washington speaks of punishing countries for buying Russian oil even as it moves aggressively to seize Venezuelan oil assets. It lectures others on global responsibility while withdrawing from the International Solar Alliance, an India-led effort to accelerate clean-energy adoption.

There is also a legal muddle beneath the belligerence. Trump has so far preferred to impose tariffs using emergency presidential powers, a strategy currently facing judicial scrutiny. Even if the Graham bill is passed, it remains unclear how tariffs of this scale would be implemented, particularly on services for which no clear statutory framework exists.

For India, partnership with Washington increasingly resembles a protection racket. Today the sin is Russian oil; tomorrow it will be another act of insufficient compliance.