Secondary Tariff Definition

A secondary tariff is a tariff on other nations for doing business with third countries. For example, Trump put secondary tariffs on China and India for doing business with Russia.

However, Trump is suddenly silent on the matter, mainly because secondary tariffs have backfired.

Trump’s ‘Secondary Tariff’ Two-Step

Bloomberg comments on Trump’s ‘Secondary Tariff’ Two-Step With India and China

US President Donald Trump is credited with inventing the strategy, essentially an adaptation of secondary sanctions — penalties that apply not to the target country but others that do business with it. Trump threatened to use this new weapon against buyers of Venezuelan oil, for example, without much follow-up (so far).

Here an obvious problem has surfaced. The US has dangled the threat of gigantic “secondary tariffs” against China and India because they buy lots of Russian oil. US Senator Lindsey Graham, Republican of South Carolina, backed legislation that could tax their exports to America at a 500% rate. But at the same time, the Trump administration is engaged in delicate trade talks with both countries — and it’s already seen firsthand how punitive measures can backfire.

And when the US imposed “secondary” tariffs of 25% on India a few weeks ago over its oil purchases — arguably the administration’s only actual use of the instrument so far — Indian Prime Minister Narendra Modi promptly made his first visit in years to China. He was seen there in friendly conversation with Chinese President Xi Jinping as well as Kremlin leader Vladimir Putin. For the US, which has cultivated India for decades as a counterbalance to Chinese power, it was hardly the ideal outcome.

When it comes to major economies like China and India, the US — which is trying to radically revamp commercial ties with everyone all at once — has plenty of its own direct trade interests to protect.

With India, that includes market access for America’s farm exports and defense industries. With China, it’s everything from artificial intelligence to fentanyl interdiction. Introducing the Russia-Ukraine war into these talks risks throwing a spanner in already complex works.

India says recent trade negotiations have been “constructive,” but that Washington continues to insist that New Delhi stop buying Russian oil if it wants to get its US tariff rate down. India has been adamant that it won’t do so.

Ultimately it’s hard to see how the US can reach agreement with either country, and make it stick, without backing away from the “secondary tariff” threat. And Trump may have found cover to do just that. Much of the pressure to get tough on Russia’s trade partners has been coming from US allies, especially in Europe. Trump’s latest strategy is to tell them that the US is ready to mirror any punitive steps they’re willing to take themselves.

But whatever steps the Europeans are ready to take, they’ve made it fairly clear that “secondary tariffs” aren’t on the list. So Trump, by his own logic — and perhaps to his relief — may not have to impose them, either.

Two-Step or a TACO?

Is this a tariff two-step or a Trump Always Chickens Out (TACO)?

One has to wonder what if any red lines Trump really has on Russia give that he has backed down on every threat.

The war in Ukraine was supposed to have ended day one.

Now Trump will no do any sanctions unless every NATO nation does them first.

Truth Social Letter to the World

A LETTER SENT BY PRESIDENT DONALD J. TRUMP TO ALL NATO NATIONS AND, THE WORLD: “I am ready to do major Sanctions on Russia when all NATO Nations have agreed, and started, to do the same thing, and when all NATO Nations STOP BUYING OIL FROM RUSSIA. As you know, NATO’S commitment to WIN has been far less than 100%, and the purchase of Russian Oil, by some, has been shocking! It greatly weakens your negotiating position, and bargaining power, over Russia. Anyway, I am ready to “go” when you are. Just say when? I believe that this, plus NATO, as a group, placing 50% to 100% TARIFFS ON CHINA, to be fully withdrawn after the WAR with Russia and Ukraine is ended, will also be of great help in ENDING this deadly, but RIDICULOUS, WAR. China has a strong control, and even grip, over Russia, and these powerful Tariffs will break that grip. This is not TRUMP’S WAR (it would never have started if I was President!), it is Biden’s and Zelenskyy’s WAR. I am only here to help stop it, and save thousands of Russian and Ukrainian lives (7,118 lives lost last week, alone. CRAZY!). If NATO does as I say, the WAR will end quickly, and all of those lives will be saved! If not, you are just wasting my time, and the time, energy, and money of the United States. Thank you for your attention to this matter! DONALD J. TRUMP, PRESIDENT OF THE UNITED STATES OF AMERICA.”

Leaders Lead, Headless Chickens and Bluffers Don’t

Leaders lead by example. They don’t shout at the top of their lungs, you first.

His Truth Social Post is really just a TACO (Trump Always Chickens Out).

Trump has threatened Putin a dozen times this year and Putin spit in Trump’s face. Now Trump demands NATO to do what he has threatened.

There are 32 NATO countries and Trump wants all of them to act before he does.

None of them have any reason to believe Trump would hold up his end of the deal. Indeed, no country can possibly believe anything Trump says at all after he unilaterally scrapped his own USMCA deal.

Backing Down on China

Trump backed down on China when China responded to high tariffs by cutting off its supply of rare earth minerals.

Now that India has told the US to go to hell over its oil imports, Trump is suddenly silent on those secondary tariffs too.

The gist of today’s Bloomberg commentary is Trump may apply the same logic to secondary tariffs on India.

But the damage has already been done. Trump drove India closer to both Russia and China via his nonsensical secondary tariffs.

Trump has no cards in this battle. And it shows.

More By This Author:

Government Benefits Are Now 19 Percent Of Total Personal Income
Real Disposable Income Up 0.1 Percent in August, Spending Up 0.4 Percent
Existing-Home Sales Drop Slightly, Stagnant For Almost Three Years