Trump Has Become A Threat To Free Trade

(MENAFN- The Arabian Post)

By Nantoo Banerjee

US President Donald Trump may have problems with Russia, Venezuela and a host of other states and has every right to decide on the US trade and diplomatic policies to deal with those countries. But he has no right to thrust upon other free nations his likes, dislikes and prejudices. Unfortunately, he is doing exactly that. Trump's administration has undermined the World Trade Organization (WTO), the body established to promote free trade and arbitrate disputes. The US has blocked appointments to the WTO's Appellate Body, effectively paralyzing its ability to issue binding rulings on trade disputes since late 2019. This has forced other nations to create alternative, interim arbitration arrangements. The US president's international trade policies, characterised by reckless tariffs, forcing countries to boycott trade with its adversaries in a total disregard for the rules-based global trading system, have already created significant global trade disruption and uncertainty. They are becoming a major threat to the stability and predictability of the global economy.

Trump's diplomatic and trade policies against oil-rich Venezuela to ramp up pressure on President Nicolás Maduro to resign by holding a naval blockade of all sanctioned oil tankers entering and leaving Venezuela have put several countries and its leading trade partners such as China, Brazil, Turkey, Colombia and India in a fix. Venezuela's trade is mainly driven by oil exports to Asia and Europe and imports of food, technology and machinery. US crude futures climbed over one percent to $55.96 a barrel in Asian trading after Trump's announcement of naval blockade. Oil prices settled at $55.27 a barrel, last week, the lowest close since February 2021. India's Reliance Industries (RIL), a major buyer of Venezuelan crude, is believed to have stopped oil imports from that country. Lately, RIL also stopped importing Russian crude oil into its export-focused SEZ refinery in Jamnagar from November 20, to comply with EU sanctions on products made from Russian oil, shifting to non-Russian crudes for its global export market ahead of the January 2026 deadline.

The US president shows a strong preference for bilateral trade agreements over the multilateral system, replacing a predictable, rules-based order with a power-based system where larger economies can exert more pressure. This approach makes the US a less reliable partner in the eyes of many of its allies. The US policy is causing global trade uncertainty as the country is constantly shifting trade policies and using the threat of new tariffs to create market instability making long-term planning difficult for businesses. International trade experts have warned that such a policy could lead to a fragmentation of the global economy into competing trade blocs, potentially resulting in economic chaos reminiscent of the 1930s. The new US approach, under President Trump fundamentally challenges and disrupts the post-WWII global trading system.

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The latest US policy has made India's planned oil imports from Venezuela for 2025-26 totally uncertain and volatile, shifting from high volumes of over 250,000 barrels per day during earlier this year to significant reductions due to new US tariffs (25% on nations buying Venezuelan oil) imposed in March 2025, causing major Indian refiner Reliance to halt purchases. India, the economy of which is nearly 90 percent dependent on imported oil, has been continuously seeking diversified energy sources like Iran and Venezuela to offset the Western embargo on Russian oil trade. This is making specific future volumes hard to predict amid complex geopolitical factors. India's 2026 oil import plans from Iran aren't finalized as they hinge on geopolitical shifts, particularly US sanctions. India has told the US that it needs Iranian (and Venezuelan) oil if it significantly cuts Russian imports to avoid price spikes.

India is currently importing a lot of oil from the US though Iran offers favourable discounts and credit terms which India seeks to leverage. India wants cheap oil from any source, aiming for energy security, but relies on US approval for sanctioned suppliers, making 2026 uncertain. India is looking for affordable oil, potentially balancing US, Russian, and Iranian supplies to ensure stability. India's crude oil imports from the US increased significantly this year, reaching record highs around October with about 568,000-575,000 barrels per day (bpd), reflecting India's strategy to reduce reliance on traditional suppliers and align with US energy initiatives. In 2026, India's oil import plan from the US focuses largely on liquified petroleum gas (LPG). The country's public sector oil refiners have agreed to import around 2.2 million tonnes of LPG in the coming year. It covers around 10 percent of India's total LPG needs in the first ever term deal with the US.

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Trump is still unhappy. He wants more. The Trump administration is applying significant pressure on its allies as well as adversaries to buy more from the US. The trade and tariff disruptions of the second Donald Trump administration have caused trade partners around the world to reconsider their economic policies and supply chains. Fuelled by uncertainty over global growth, capital market volatility threatens to chill inward investment and strain liquidity. The energy sector, a critical anchor for Gulf economies as well as large consumers like India and China, faces layered risks. US shale oil competitiveness could pressure Organization for Petroleum Exporting Countries (OPEC+) production coordination. Further, any shift in global trade routes away from Gulf maritime chokepoints could impact regional transit revenues.

Aiming to reduce trade deficits and boost domestic industry through measures such as universal tariffs, reciprocal duties, and restrictions on key imports, leading to retaliations and complex global trade negotiations, President Trump plans to sizeable ramp up the US economy using tariffs and economic pressure to force countries like China, India, Canada, and Mexico to align with its trade policies and objectives. It has firmly stood against Venezuela's bid to deepen economic ties with India at a time when the South American country has expressed a strong desire to enhance economic cooperation with India, aiming to broaden the relationship beyond the traditional oil trade. The US is using trade and tariff coercion to push its economic agenda. Consequently, fast growing economies like India are opting for bilateral trade deals to deal with the situation. (IPA Service)

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