Why The US Can't Risk A Two-Front Trade War With 'The Dragon And The Elephant' Over Russian Oil

(MENAFN- Live Mint) US President Donald Trump has not yet made a decision on whether to impose tariffs on China for purchasing oil from Russia, citing the complexity of US-China relations, which extend beyond the conflict involving Russia, according to Vice President JD Vance.

“The President said he's thinking about it, but he hasn't made any firm decisions,” Vance told Fox News on Sunday. He was responding to a question about whether Washington would apply the same tariff measures to China as it has considered for countries like India, which also import Russian oil.

Also Read: Glad to see warming US-Russia ties, Xi Jinping tells Putin as China defends Russian oil imports

“Obviously, the China issue is a little bit more complicated because our relationship with China affects a lot of other things that have nothing to do with the Russian situation,” Vance said.

He added that Trump is“reviewing his options, and of course, going to make that decision when he decides”.

The US had initially imposed 25 per cent reciprocal tariffs on India, and Trump last week slapped another 25 per cent levies on Delhi for its purchases of Russian oil, bringing the total duties on India to 50 per cent, among the highest imposed by the US on any country in the world.

Oil prices have declined in August after three consecutive months of gains, as investors brace for a possible oversupply later this year. The drop follows OPEC's decision to ease production cuts, raising concerns of a surplus. Meanwhile, crude futures have also been pressured by signs of slowing economic growth in the US, where broader trade tariffs under Trump have dampened economic activity and threatened energy demand.

Also Read: Nobel laureate Abhijit Banerjee on Trump tariffs: 'India should consider whether cheap Russian oil is beneficial'

The US has been trying for the past month to broker a ceasefire in Ukraine, but its efforts have failed. While Kyiv has agreed in principle, the Kremlin continues to seek more favourable terms.

Trump also issued an ultimatum to impose additional sanctions on Russia and introduce secondary tariffs targeting countries that buy Russian oil if the Kremlin did not move toward a settlement. The deadline was Friday. The White House did not answer questions Saturday about possible sanctions.

What does China say about buying Russian oil?

On 8 August, China defended its continued imports of Russian oil, rejecting US threats of new tariffs following Washington's imposition of secondary levies on India for purchasing energy from Moscow.

Also Read: White House official reveals why US didn't tariff China for buying Russian oil: 'Don't want to get to a point...

“It is legitimate and lawful for China to conduct normal economic, trade and energy cooperation with all countries around the world, including Russia,” the Chinese Foreign Ministry said in a statement to Bloomberg News.“We will continue to adopt reasonable energy security measures by our national interests.”

US-China trade relations

From January to June 2025, the country recorded total exports of $56.01 billion and imports of $167.48 billion, resulting in a trade deficit of $111.47 billion.

Monthly data shows a consistent trade imbalance, though the gap has gradually narrowed over time. In January, the deficit stood at $31.74 billion, with exports at $9.90 billion and imports at $41.64 billion. By June, exports had increased to $9.44 billion while imports declined to $18.95 billion, reducing the deficit to $9.51 billion. According to the government census data, this trend reflects a steady improvement in the trade balance over the six months.

2025: U.S. trade in goods with China. (Photo: United Trade Census)

Meanwhile, according to recent customs data, China's imports from Russia rose slightly in July to $10.06 billion, the highest monthly figure since March. However, total imports from Russia remain 7.7 per cent lower so far this year compared to the same period in 2024.

Bloomberg reported, citing sources, that US and Russian officials are working toward an agreement that would lock in Moscow's occupation of territory seized during its military invasion.

The US is working to get buy-in from Ukraine and its European allies on the deal, which is far from certain, they said.

Also Read: Russian oil import cuts could hit Indian OMCs GRM by $1–1.5/bbl, says report

Meanwhile, the US finds itself walking a fine line in its dealings with China. While President Trump ramps up pressure on Beijing through tariff threats and the prospect of secondary sanctions, his administration is also engaged in ongoing trade truce negotiations.

According to reports, Treasury Secretary Scott Bessent recently assured Chinese officials that Washington is committed to enforcing sanctions. However, many observers doubt Trump can afford to ignite a full-scale economic confrontation with both China and India at the same time.

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