Trump, Tariffs, and the Risk of Cornering a Rabid Dog

Donald Trump has long viewed tariffs as more than just a trade tool. He uses them to protect American industry, raise government revenue, spur domestic production, and apply diplomatic pressure. Now, he’s threatening to apply “secondary tariffs” on Russian oil if Vladimir Putin refuses to enter serious peace negotiations over Ukraine.  Putin, however, is a volatile figure—widely regarded as unpredictable and increasingly unstable.  So, let’s examine the implications of this strategy, beginning with a basic understanding of how tariffs work.

What Are Tariffs?

At their core, tariffs are taxes on imported goods. The importer pays the tariff, not the exporter, and the importer decides whether to absorb the cost or pass it along to consumers.  Typically, the goal is to make foreign goods more expensive and less attractive, thereby giving a competitive edge to domestic products.

What Are Secondary Tariffs?

What Trump is proposing in the case of Russia goes beyond standard tariffs.  He’s threatening secondary tariffs, also known as extraterritorial tariffs.  These tariffs don’t target the country of origin (Russia in this case), but rather third-party countries—such as China and India—that continue doing business with Russia.  The message is clear: If China or India keeps buying Russian oil, the U.S. will impose tariffs on most or all of their exports to America, using access to the American market as leverage.

For example, if India purchases $1 billion worth of Russian oil, Trump might impose a 20% tariff on all Indian exports to the U.S.  If India exports $50 billion annually to the U.S., that tariff would result in $10 billion in duties—raising the cost of Indian goods and making them less competitive in the U.S. market.  The economic pain would fall on Indian businesses, potentially forcing the Indian government to reconsider its ties with Russia.  In this way, secondary tariffs aren’t about regulating trade—they’re about coercing foreign governments by penalizing their unrelated exports.

How Is This Different from Sanctions?

Sanctions take a different route.  Consider, in 2012 the U.S. and EU sanctioned Iran by pressuring SWIFT (the Society for Worldwide Interbank Financial Telecommunication) to disconnect Iranian banks from the global financial system.  Based in Belgium, SWIFT complied after the EU passed binding legislation.  The result?  Iran was cut off from receiving payments for its oil, and its economy tanked.

Being removed from SWIFT is one of the most devastating non-military tools in a nation’s arsenal.  Without access to global banking infrastructure, a nation’s trade effectively grinds to a halt.  Countries like Iran have tried workarounds, such as bartering or alternative networks with China, but these are clumsy and far less effective.

“Never Corner a Rabid Dog”

Tariffs and sanctions alike are forms of economic coercion, and both carry risks—especially when aimed at a man like Vladimir Putin, who controls more than 5,000 nuclear warheads and has shown little regard for human life.  Most nations don’t have the leverage the United States has in trade negotiations because we’re the largest market on earth—as seen in the recent U.S.-EU agreement, which certainly appears to have favored American interests.  But Putin is different.  He may believe he holds a nuclear trump card—an ace he’s willing to play if pushed too far.  History warns us: cornering a dangerous, irrational, or desperate adversary can provoke an unpredictable and violent response.

Lest we forget, Putin has been embarrassed on the world stage. The once-vaunted  Red Army has been exposed as a shell of its former self, forcing Putin to rely on North Korean troops and Iranian and Chinese weaponry.  And he was absolutely humiliated when Ukraine’s drones hit targets deep inside Russia, destroying perhaps as much as a third of his strategic bomber force.

To draw a loose analogy, imagine if in a conflict with Mexico, the cartels took out our two newest Ford class carriers.   And that’s the nub of the problem, we have a world figure, who considers himself a ‘player’ on the world stage and who cannot afford to appear weak, and openly caving to Trump’s demands is simply untenable from his perspective.

Medvedev’s Warning

Reacting to Trump’s tariff threat, Dmitry Medvedev—former Russian President and now Deputy Chairman of the Security Council—issued a chilling response:  “Trump’s playing the ultimatum game with Russia. He should remember that Russia isn’t Israel or even Iran. Each new ultimatum is a threat—a step towards war. Not between Russia and Ukraine, but with his own country.”

Medvedev’s message was clear: Russia will not be bullied like smaller powers.  Unlike Israel or Iran, Russia sees itself as a peer to the U.S., armed with global reach and nuclear deterrence.  And any attempt to strong-arm Moscow risks escalation—beyond Ukraine—and into a direct confrontation between the United States and the Russian Federation.

Perhaps there are back-channel negotiations going on but as Donald Trump is fond of saying, “We’ll have to see what happens next.”