A Muted Market Reaction, Trade Disruption Concerns, and Questions of Economic Coercion

President Donald Trump's threat of "very severe tariffs" on Russia, contingent on a ceasefire in Ukraine, appears to have been met with a muted response. Instead of fear, the announcement seems to have elicited a collective public shrug.

Kremlin spokesman Dmitry Peskov acknowledged the seriousness of Trump's statements, stating that Russia needed time to analyze them. However, investors in Moscow, anticipating tougher measures, seemed to welcome the 50-day grace period on tariffs. The Moscow Stock Exchange saw a rise after the announcement. Oil prices also decreased, suggesting that investors doubted Trump would follow through on his threat.

Leonid Slutsky, a prominent nationalist politician, noted that Trump did not announce immediate anti-Russian measures or asset confiscation, suggesting the president was attempting to balance Western support for Kyiv with avoiding direct confrontation with the Kremlin. Trump's comments were made during a meeting with the NATO Secretary-General, coinciding with a bipartisan bill in Congress that would impose significant tariffs on countries purchasing Russian oil and gas.

While some praised Trump's announcement, others expressed skepticism. Konstantin Kosachev questioned the impact of the 50-day timeframe, and former Russian President Dmitry Medvedev dismissed the threat as a "theatrical ultimatum." Trump stated he would impose tariffs of about 100% if a deal wasn't reached within the specified period. A White House official clarified that the tariffs would apply to Russian goods and secondary sanctions on countries buying Russian exports.

Trump's comments represent a shift in tone, given his past admiration for Vladimir Putin. Many Western countries have reduced financial ties with Moscow since the invasion of Ukraine. However, countries like China and India continue to support Russia's war efforts through oil purchases.

U.S. officials stated the tariffs would target countries like India and China that are buying Russian oil, potentially impacting the Russian economy. However, some experts believe the secondary tariffs are unlikely to be effective without direct costs imposed on Moscow. The tariffs also risk disrupting delicate trade talks, particularly between the U.S. and China.

The tariff agenda has also raised concerns for India, which is negotiating a trade deal with the U.S. India's External Affairs Minister stated that the country had been in contact with U.S. officials regarding its concerns. Additionally, a European negotiator warned that a 30% tariff on European goods would significantly impact transatlantic trade.