In the course of the Q&A at the Oct. 2 meeting of the Valdai Discussion Club, Russian President Vladimir Putin was asked about U.S. President Donald Trump’s tariff policy and its impact on Russia and its trading partners. Putin responded:
“I will certainly address these potential tariff restrictions on trade between the United States and our trading partners—China, India, and several other states. We know that there are advisers within the U.S. administration who believe this constitutes sound economic policy. Concurrently, there are experts in the United States who doubt this, and many of our own specialists share these doubts regarding its potential benefits.”
He explained that tariffs will backfire on the U.S., noting that they “would also raise prices due to emerging shortages and more expensive logistics. Should this occur and prices escalate, the Federal Reserve System would then be forced to maintain high interest rates or increase them to curb inflation, ultimately slowing the U.S. economy itself. This is not a matter of politics; it is purely economic calculus. … Thus, the benefits for the U.S. are far from evident.”
Putin then took up the case of India, which has been hit with 50% tariffs by the U.S. “As for the countries targeted by these threats—take India, for example: If India were to reject our energy commodities, it would incur measurable losses, estimated variously. Some suggest these could amount to $9-10 billion if they comply. Conversely, if they refuse, sanctions in the form of higher tariffs would be imposed also resulting in comparable losses. Why, then, should they comply, especially when facing substantial domestic political costs?”
There are crucial political factors as well. “The people of a country like India will, believe me, scrutinize their leadership’s decisions closely and will never tolerate humiliation from anyone. Moreover, I know Prime Minister Modi; he would never take such steps himself. There is simply no economic rationale for it.”
