09/08/2025

First page Previous page 13 Next page Last page

BIZ & FINANCE SATURDAY | AUG 9, 2025

Trump tariffs on buyers of Russian oil raise global risks

India inflation likely dropped to eight-year low in July: Poll BENGALURU: Cooling food price rises likely reduced India retail inflation to an eight-year low of 1.76% in July, below the low end of the Reserve Bank of India’s 2% to 6% tolerance band for the first time in over six years, a Reuters poll of economists showed. Despite uneven monsoons, a strong spring harvest has helped India keep a lid on food prices, extending the country’s longest disinflationary streak in more than a decade. The RBI left rates unchanged at 5.5%, as expected on Wednesday, and said the inflation outlook was “more benign”. The annual change in the Consumer Price Index (CPI) eased to 1.76% in July from 2.1% in June, according to the median forecast from an August 4-8 survey of 41 economists. Forecasts ranged from 1.1% to 3.1%. If correct, this will mark the ninth straight month inflation has fallen. “We are expecting food inflation to be lower, to contract on a year-on-year basis. We continue to see this moderation on the back of healthy supply coming from last year – that’s bringing about this disinflationary trend,“ said Sakshi Gupta, principal economist at HDFC Bank. “Although on a month-on-month basis, certain vegetable prices have gone up – for instance, onion and tomato prices – but that increase has been very moderate and lower than the usual seasonal trends.” Inflation was expected to average 3.4% this fiscal year, slightly above the RBI’s 3.1% forecast, a recent separate Reuters poll showed. The benign inflation outlook gives the RBI more room to support the economy, which is under pressure after US President Donald Trump sharply raised tariffs on Indian goods. “Given the challenging external environment, high US tariffs on Indian goods, a general environment of economic uncertainty and weakening domestic activity indicators, growth may disappoint,“ said Dhiraj Nim, an economist at ANZ.“Inflation could undershoot the RBI’s revised projections but is unlikely to drive further easing.” Core inflation, which strips out volatile components like food and fuel and better reflects domestic demand, was expected to have fallen to 4.2% in July, down from an estimated 4.3% in June. The Indian statistics agency does not publish official core inflation data. – Reuters

knowing what the US needs out of them,” said Donovan, now director of the Economic Statecraft Initiative in the Atlantic Council’s GeoEconomics Centre. China has demonstrated leverage over the US by cutting off mineral exports and new tariffs would upset a delicate balance negotiated since May to restart those flows critical to a host of US industries. India has leverage over generic pharmaceutical exports and precursor chemicals to the US. Both countries say that oil purchases are a sovereign matter and contend that they are playing by the previous rules, namely the price cap on Russian crude. Secondary tariffs would raise the cost of imports into the US of products from Russia’s customers, giving them an incentive to buy their oil elsewhere. Squeezing the shipments risks spiking fuel prices and inflation around the world that could pose political difficulties for Trump. The month after Moscow’s February 2022 invasion, fears of disruptions from Russia pushed international crude prices close to US$130 per barrel, not far from their all-time high of US$147. If India were to stop buying 1.7 million barrels per day of Russian crude, about 2% of global supply, world prices would jump from the current US$66, analysts said. JP Morgan analysts said this month it was “impossible” to sanction Russian oil without triggering a price jump. Any perceived disruptions to Russian shipments could propel Brent oil prices into the US$80s or higher. Despite Trump’s statements that US producers would step in, it would be unable to quickly ramp up, they said. Russia could retaliate, including closing the CPC Pipeline from Kazakhstan, which could create a global supply crisis. Western oil firms Exxon, Chevron, Shell , ENI and TotalEnergies ship up to 1 million barrels per day via CPC, which has total capacity of 1.7 million bpd. Cullen Hendrix, senior fellow at the Peterson Institute for International Economics, said energy shocks are never welcome, especially not amidst a softening housing market and weak job growth. A key question is whether Trump can frame any economic pain as necessary to force Russia to negotiate. – Reuters

Rumer, a former US intelligence analyst for Russia who directs the Carnegie Endowment for International Peace’s Russia and Eurasia Programme. “Theoretically if you cut off Indian and Chinese purchases of oil that would be a very heavy blow to the Russian economy and to the war effort. But that isn’t going to happen,” he said, adding that the Chinese have signaled they will keep buying Russia’s oil. The White House did not immediately respond to a request for comment. The Russian embassy in Washington did not immediately respond. Secondary tariffs would hurt Russia, the world’s second leading oil exporter. The West has pressured Russia since late 2022 with a price cap on its oil exports, intended to erode Russia’s ability to fund the war. That cap has piled costs on Russia as it forced it to reroute oil exports from Europe to India and China, which have been able to import huge amounts of it at discounted prices. But the cap also kept oil flowing to global markets. In an early sign that Putin hopes to avoid the tariffs, the White House said that Putin and Trump could meet as soon as next week, following a meeting between US envoy Steve Witkoff and the Russian leader on Wednesday. But some analysts are skeptical that Moscow is ready to stop the war. Brett Bruen, former foreign policy adviser for former president Barack Obama now head of the Global Situation Room consultancy, cautioned that Putin has found ways to evade sanctions and other economic penalties. And even if tariffs and sanctions cut into Russia’s revenues, Putin is not under much domestic pressure. Secondary tariffs, Bruen said, could start to cause some economic pain. “But the question is whether that really changes Putin’s behaviour.” The tariffs could also create new problems for the Trump administration as it pursues sweeping trade deals, especially with India and China. Kimberly Donovan, a former US Treasury official, said the tariffs could hamper the US bilateral and trade relationships with India and China. “You’ve got two major oil importers that can kind of dig in their heels and push back,

WASHINGTON: From punishing Brazil to trying to curb imports of fentanyl, US President Donald Trump has wielded the threat of tariffs as an all-purpose foreign policy weapon. With a Friday deadline for Russia to agree to peace in Ukraine or have its oil customers face secondary tariffs, Trump has found a novel, but risky, use for his favourite trade tool. The administration took a step towards punishing Moscow’s customers on Wed nesday, imposing an additional 25% tariff on goods from India over its imports of Russian oil, marking the first financial penalty aimed at Russia in Trump’s second term. No order has been signed for China, the top Russian oil importer, but a White House official said on Wednesday, secondary measures that Trump has threatened against countries buying the petroleum were expected on Friday. These are the latest in a string of Trump’s tariff threats on non-trade issues such as pressing Denmark to give the US control of Greenland, attempting to stop fentanyl deliveries from Mexico and Canada, and penalising Brazil over what he described as a “witch hunt” against former President Jair Bolsonaro. While secondary tariffs could inflict pain on the Russian economy – severing a top source of funding for Russian President Vladimir Putin’s war effort – they also carry costs for Trump. Oil prices will likely rise, creating political problems for him before next year’s US midterm congressional elections. The tariffs would also complicate the administration’s efforts to secure trade deals with China and India. For his part, Putin has signalled that Russia is prepared to weather any new economic hardship imposed by the US and its allies. There is “close to zero chance” Putin will agree to a ceasefire due to Trump’s threats of tariffs and sanctions on Russia, said Eugene o Move aims to pressure Putin but could spike energy prices and strain US ties with India, China

Education matters remain an important component of Malaysian society. Today the landscape is fast paced with new exciting developments in technology such as AI, coding, virtual reality, and cybersecurity, leading the way for changes in curriculum development. To showcase the latest and most updated content, we invite you join us in 2025, and be part of our Education Focus!

Malaysian Paper

Made with FlippingBook flipbook maker