US proposes G7 high tariffs against China and India for purchasing Rosneft oil

The US administration will push the G7 to raise import tariffs on China and India by 50-100% over their purchases of Russian oil.

The G7 finance ministers will consider a package of new measures this week, the Financial Times reports.

The White House is already lobbying its EU partners, arguing that “significant tariffs” could be lifted the day the war ends. The US has previously raised tariffs on selected Indian imports to 50% over its purchases of Russian oil; on China, Washington sharply raised tariffs in the spring, then partially rolled them back amid market reaction.

Brussels doubts that the bloc can sustain such high tariffs on two key trading partners without significant economic risks and possible countermeasures from Beijing.

At the same time, the EU will offer alternatives: tougher sanctions against the Russian energy sector and a postponement of the “deadline” to 2027 for a complete cessation of purchases of Russian oil and gas (for this, pressure will have to be exerted on Hungary and Slovakia, which still receive oil via pipeline).

The replacement of Russian LNG with American supplies is also being discussed; currently the EU still buys about 20% of its gas from Russia (compared to ~45% until February 2022).

Canada, which holds the G7 presidency, has convened a meeting of finance ministers “after consultations with the US”. On the agenda are additional levers of pressure on Russia, including tariffs on countries that “finance the Russian military machine” through energy imports. At the same time, Ottawa has its own dilemmas: attempts are underway to restore relations with India and improve interaction with China as part of economic diversification from the US.

If there is no consensus on tariffs, the G7 could tighten secondary sanctions, de-offshore Russian oil schemes (including the shadow fleet), and accelerate the replacement of Russian energy sources in Western markets.

The day before, USM wrote that Russia’s oil export revenues had already fallen to a minimum during recent 5 years.