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India caught in middle as Trump tests out new Russia policy
With friends like these! President Donald Trump on Wednesday announced a new 25% tariff on India, one of the US’s closest allies in Asia.
Although India is a “friend”, Trump said, the country’s notoriously high trade barriers had prevented more commerce with the US. The new measures will go into effect on Saturday.
The move comes smack in the middle of rocky, ongoing trade talks between the US and India. Trump wants to crack open India’s vast market for American firms, while India is keen to protect certain domestic industries – particularly pharmaceuticals, auto parts, and agriculture – as well as the access of Indian students and high-skilled workers to the US.
India is in a tough spot – as Trump carries on talks with various countries at once, PM Narendra Modi doesn’t want to get stuck with a higher US tariff rate than other export-oriented Asian competitors who are all jockeying for access to the massive US market.
But Trump has put Modi in another, even trickier bind. He said India will pay a “fine” for its purchase of Russian oil. While details have yet to emerge, this looks like the first instance of Trump using so-called “secondary sanctions” to pressure Vladimir Putin, who has serially ignored Trump’s ongoing demands to end the war in Ukraine.
Earlier this month Trump threatened a tariff of 100% on any countries that trade with Russia unless the Kremlin stops the war within 50 days. This week he cut the deadline to “10 or 12 days.”
India is one of those countries, big league. Delhi purchases roughly 2 million barrels of oil daily from Russia, accounting for 40% of India’s total oil imports. That amount reflects a huge boost in Russian imports after 2022, when European sanctions over the invasion of Ukraine made Russian crude way cheaper for non-European buyers.
Analysts say that India could certainly go back to its traditional suppliers in the Middle East and Africa, but it would have to accept significantly higher costs compared to the blackballed Russian crude it’s gotten used to.
The dragon in the room. Still, if Trump is serious about landing a blow on Russia’s oil-dependent economy, he’ll sooner or later have to look towards the other
billion-person Asian power that gulps down Kremlin crude. China imports more than 2 million barrels of the stuff a day, about a fifth of its total imports. Together with India, the two countries buy more than 80% of Russia’s oil exports, accounting for about 5% of overall global crude demand.
Beijing is also Russia’s largest trade partner overall. With the US locked in tricky trade talks with its biggest global rival, is Trump ready to swing the secondary sanctions hammer at Beijing too?
Taiwan President Lai Ching-te attends the coast guard annual drill in Kaohsiung, Taiwan, June 8, 2025.
What We’re Watching: Taiwan’s president latest setback, Angolan fuel protests turn violent, Trump launches Sudan peace effort
Trump blocks Taiwan’s president from traveling through New York
US President Donald Trump blocked Taiwan’s president from stopping over in New York on a trip to Central America. The move, which comes right as US and Chinese officials are discussing a trade deal again, is seen as a concession to Beijing, which famously does not recognize Taiwan’s independence and objects to Taiwanese officials visiting the US, who have traditionally used US transits to bolster unofficial ties. Does this mean Washington’s decades-long military and diplomatic support for Taiwan could be in play as Trump negotiates with China?
Angolan fuel protests turn violent
A three-day long strike by taxi drivers angry about a 33% diesel price hike has turned into a violent demonstration involving thousands in the capital Luanda. Four people have been killed and hundreds arrested amid rioting, looting, and the destruction of cars. The effect of the fuel price hike extends well beyond the gas tank, as it has pushed up prices for food and other essentials as well, exacerbating existing food insecurities in the sub-Saharan African nation.
Trump launches new Sudan peace process – with a twist
The Trump administration is launching a new effort to end Sudan’s civil war between the Sudan Armed Forces (SAF) and the Rapid Support Forces (RSF), a conflict that has killed tens of thousands and displaced 13 million over the last two-plus years. Rather than meeting with those two groups directly, Trump is flipping the script and starting with their respective regional backers, the UAE (which supports RSF) and Egypt and Saudi Arabia (which back SAF). Can Trump’s Gulf connections and transactional style work where others have failed? Read Ian Bremmer’s take on that here.
An American flag flutters over a ship and shipping containers at the Port of Los Angeles, in San Pedro California, U.S., May 13, 2025.
Art of the backdown
Donald Trump’s supporters like to tout his 1987 book, The Art of the Deal, when they discuss his trade gamesmanship, but, a month after “Liberation Day,” it is getting harder for them to convince skeptical Americans that he is winning more than they are losing.
On Monday, the White House announced a breakthrough in trade talks with China, but experts note that American negotiators appear to have won few concessions after a month of damaging uncertainty for US business. The on-again-off-again tariffs have rattled small business owners and stoked fears of a recession.
The announcement of a partial reprieve — there is still a 30% tariff on most imports from China — was greeted as good news by shippers, who had shifted cargo vessels to other routes, but uncertainty around the future of the relationship remains high, which discourages investment.
The editorialists at the Wall Street Journal think Trump may have learned that his capacity to play chicken with China is not as strong as he thought it was, which may weaken the internal faction of China hawks led by Peter Navarro, senior counselor for trade and manufacturing.
The remaining tariffs still give Trump leverage over other leaders, since many countries want to keep selling into the American market, but opinion polling shows that voters are skeptical and fear Trump’s tariff policy will stoke inflation. Since the Chinese Communist Party doesn’t have to worry about midterm elections, and the US president does, they seem to have decided they can outwait him, which may limit how far he can push his luck.
Containers on a cargo ship are seen at an industrial port in Tokyo, Japan April 3, 2025.
Beijing tries to woo an uninterested Tokyo over joint tariff fight
Chinese Premiere Li Qiang sent Japanese Prime Minister Shigeru Ishiba a letter asking that they “fight protectionism together,” according to local reports Tuesday, as both countries face potentially disastrous US tariffs.
“I don’t know what the equivalent in Japanese for ‘chutzpah’* is, but I think the Japanese bureaucrats will snicker a bit to themselves,” says David Boling, Eurasia Group’s director for Japan and Asian trade. “China has a tendency when relations with the US are not going well to suddenly become much more positive in their approach to Japan.”
China is Japan’s largest trading partner but a highly distrusted neighbor from a national security perspective. Japan launched trade talks with the United States last week, and Boling says Tokyo is determined to strike a deal.
“The United States is just too important as an ally and trading partner, and even if talks break down, they’re not going to look to China first,” he says.
What’s more, Ishiba faces a crucial election in the upper house of the Diet, Japan's legislature, in July, right around when the US tariff pause is due to expire. With his political life on the line, we’re watching for an agreement in principle to be sealed with the US soon.
*Chutzpah is 厚かましさ (astukamashi-sa), if you were curious.
U.S. President Donald Trump meets with China's President Xi Jinping at the start of their bilateral meeting at the G20 leaders summit in Osaka, Japan, June 29, 2019.
Trump's China policy risks allies
What is President Donald Trump’s strategy on China? On the one hand, he slapped additional 10% tariffs on Chinese goods and is considering $1 million fees on Chinese-built vessels entering US ports. On the other, Washington and Beijing are reportedly discussing a cozy-sounding “birthday summit” between Trump and Chinese President Xi Jinping to talk trade in June. It’s enough to give investors whiplash – and make neighboring nations nervous.
And they may have good reason. Last week, Trump issued an “advance warning” to long-time allies Japan and South Korea that he is not prepared to defend them against Chinese aggression unless they make economic concessions. He complained that the American security treaty with Japan is nonreciprocal and claimed that “South Korea’s average tariff is four times higher” than that of the US.
But Trump was referencing South Korea’s Most Favored Nations tariff of 13.4%, which does not apply to most goods traded between the two countries since they signed a free trade deal in 2012. The actual tariff rate charged by South Korea on US goods is 0.79%, leading Seoul to offer to resolve any “misunderstanding” about the real charge.
Meanwhile, China’s talking tough. The Chinese defense ministry recently stated that it will “tighten the noose” around Taiwan if its pro-independence movements escalate. This signals that China will continue to use military gray-zone coercion against Taiwan to deter moves toward – or remarks about – independence, according to Eurasia Group regional expert Ava Shen. Beijing has also vowed to fight a tariff war with the US “to the bitter end” and is busily tariffing other nations, such as Canada, which saw a 25% tariff imposed on seafood, including important lobster exports, as of March 20.
What We're Watching & What We're Ignoring
WHAT WE'RE WATCHING
US-EU trade talks – Last summer, President Trump committed to slowing escalating trade measures against the EU in return for a deal to lower European subsidies on agricultural goods and protections for the automotive industry. But EU negotiators now want to exclude Europe's massive agricultural subsidies and other farmer-friendly policies in an upcoming round of talks. That jars with the goals of the US, and issues like labelling genetically-modified foods and the free flow of data are also likely to prove contentious. We're watching this, because failed trade negotiations could quickly lead to a renewed fight between the US and EU.
Zimbabwe – Deadly protests erupted in Zimbabwe this week as police cracked down on demonstrators who burned tires and blocked roads to vent their fury at a surprise hike in fuel prices. Raising fuel prices is always controversial – just ask French President Emmanuel Macron. But in Zimbabwe, people have additional reasons to be upset. The fuel shortages are indicative of deeper economic woes. Zimbabwe was forced to abandon its currency and adopt the US dollar during the ruinous reign of Robert Mugabe, whom the current president, Emmerson Mnagawa (known as "The Crocodile"), ousted a little over a year ago following a military coup. The change of power did little to fix the things — the unemployment rate is 80 percent, and Zimbabwe isn't producing enough hard currency to pay for its imports. The Crocodile may be in charge, but he hasn't managed to escape Mugabe's poisoned legacy.
WHAT WE'RE IGNORING
France's airing of grievances – Speaking of Macron, the French president has launched his latest attempt to break the gridlock of the gilets jaunes protests, now entering their tenth week: a three-month long national debate. Macron hopes that an airing of grievances in town halls across the nation will help "transform anger…into solutions." But the gilets jaunes are a leaderless movement venting anger at out-of-touch elites. They're unlikely to find common ground with Macron, a pro-business former investment banker who has already ruled out backtracking on controversial parts of his reform program. French King Louis XVI tried a similar approach in 1789, and it didn't end well for him. Macron was elected by voters who wanted someone – anyone – other than the bums in charge. Now he is the bum in charge.
The Venezuelan opposition – On Sunday, Venezuela's national intelligence service arrested Juan Guaido, president of the opposition-led legislature, and then quickly released him. This strange incident highlights the chaotic decision-making inside the Maduro regime, and it rallied international support behind an important opposition figure. But we're ignoring it simply because we don't see signs that Maduro's grip on power slipping anytime soon. Until the army decides it can no longer afford the economic devastation his government has created, Maduro will remain in power. He's helped by the fact that more than two million people who might otherwise be protesting in the streets have fled the country.