US President Donald Trump has hinted at imposing tougher sanctions on Russia, expressing frustration that Russian President Vladimir Putin has refused to halt his military action in Ukraine despite Trump’s mediation efforts. When questioned by the media yesterday on whether he was preparing a second wave of sanctions against Russia, Trump responded firmly: “Yes, I will.”
The move under consideration includes the imposition of higher tariffs on countries purchasing Russian oil. If implemented, the measures are expected to directly affect India and China. Among these, India has already voiced dissatisfaction with the punitive steps taken by the Trump administration so far. Observers are now watching closely to see if Trump will escalate action against India or focus primarily on China, currently the largest buyer of Russian oil.
Trump’s strategy is aimed at putting severe economic pressure on Putin by striking at the core of Russia’s revenue, its oil exports. Existing sanctions have already disrupted Russia’s export earnings and weakened the financial position of the Kremlin. Yet, in defiance of mounting pressure, Putin has intensified his military campaign in Ukraine. According to Russian officials, recent operations using drones, missiles, and fighter aircraft targeted Ukrainian weapons depots and transportation infrastructure. The Kremlin described this as one of the largest strikes against Ukraine in recent months.
Legal setbacks threaten Trump’s tariff strategy, prompting turn to smoot-hawley law
While Trump exerts economic pressure abroad, he faces mounting legal challenges at home. The tariffs he imposed on countries including India have been declared unlawful by two separate courts in the United States, with judges ruling that his administration had abused its authority. However, these tariffs remain in force temporarily, as the rulings have been frozen until October 14, pending appeal before the Supreme Court.
The stakes of this appeal are high. Should Trump lose in the Supreme Court, his administration will be compelled to return all tariff revenues collected during his second term. The estimated amount stands at over ₹13 lakh crore (150 billion dollars). Yet, US Treasury Secretary Scott Besant has projected an even higher figure, warning that the financial liability could range between $750 billion and $1 trillion. Trump, anticipating this potential setback, has attempted to sway the court by arguing that overturning the tariffs would devastate the US economy, pushing it toward collapse and relegating the country to what he described as “a third world nation.”
In preparation for an adverse Supreme Court ruling, Trump has reportedly devised a “Plan B.” Currently, tariffs imposed by his administration reach as high as 50% on imports from various countries. If the Supreme Court strikes them down, the legal ceiling would fall back to just 15%. To counter this, Trump plans to invoke Section 338 of the Smoot-Hawley Tariff Act of 1930, a rarely used provision that grants the president authority to impose tariffs of up to 50%, but only for a limited duration of five months. This measure, though temporary, could allow Trump to maintain pressure on foreign exporters while exploring longer-term legal or political remedies.
Indian markets hold steady amid global volatility in US data, gold, and oil
Despite these international headwinds, the Indian market has shown resilience. The Gift Nifty opened the week with a rise of about 100 points, indicating that both the Sensex and Nifty may start the day on a positive note. Analysts suggest that the momentum generated by recent GST slab reforms and tax rate cuts is expected to boost investor confidence further. Nevertheless, profit-taking last Friday saw the Sensex and Nifty closing with minor losses, reminding investors of the market’s short-term volatility.
Across the Atlantic, US futures markets have displayed signs of weakness. The release of last month’s employment data, which significantly exceeded expectations, has been viewed paradoxically as a setback, raising fears that wage growth could fuel inflationary pressures. Investors are now awaiting two critical data releases this week, the US Producer Price Index on Wednesday and the inflation report on Thursday. Disappointing numbers would be interpreted as confirmation of deeper economic distress in the United States.
Meanwhile, commodity markets have been fluctuating under the weight of geopolitical and economic uncertainty. Gold prices in the international market are trading slightly lower, down $6 at $3,590 per ounce. However, analysts point to signs of an impending rebound. The prospect of lower US interest rates, combined with the continued instability stemming from the Russia-Ukraine war, is expected to support gold prices in the medium term. Only last week, gold had reached a record high of $3,599 per ounce.
Crude oil markets, too, are witnessing downward pressure. Prices of both WTI and Brent have fallen to $62 and $66 per barrel, respectively. The decline follows Saudi Arabia’s request to increase global production and signals from OPEC+ that the group is preparing to raise output beginning in October. If production does rise, analysts expect prices to fall further, potentially dipping below $60 per barrel. Such a development would be particularly favourable for India, which stands to benefit significantly from lower import costs.
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