An Ultimatum With a Triple Bottom Line: Why Trump is demanding that NATO impose tariffs on China

Safety wedge

The latest twist in the issue of sanctions and economic pressure on Russia emerged two weeks ago, on 4 September, when President Trump joined a meeting of the 'coalition of the willing' to discuss security guarantees for Ukraine. The American president abruptly shifted the focus of the discussion, declaring that Europe must stop buying Russian oil altogether and thereby financing the war, as well as exert economic pressure on China, which provides Russia with key economic support, sources told Reuters. A few days later, following a trip to Washington by EU Special Representative for Sanctions Policy David O'Sullivan to discuss the ‘second phase’ of pressure on Russia, US Treasury Secretary Scott Bessent also stated, albeit in a slightly softer form, that for American measures to succeed, 'European partners must fully join in.' By the end of last week, during a phone call with G7 finance ministers, Bessent more forcefully indicated that partners 'should join the US in imposing tariffs on countries buying Russian oil.' Finally, on Saturday, Trump published what he called a 'Letter to NATO and the World,' in which he explicitly linked the introduction of sanctions against Russia to all NATO members giving up Russian oil purchases and NATO as a group imposing tariffs of 50–100% on Chinese goods.

The demand first voiced at the 4 September meeting allowed Trump, on the one hand, to sidestep the awkward topic of US security guarantees for Ukraine under a potential peace deal with Russia, and on the other, to 'flip the table' at a time when he was under intense pressure due to his repeated promises to impose tough and crushing economic measures against Russia. The two conditions Trump has set – a NATO-wide refusal to buy Russian oil and the imposition of tariffs on China and India – are wholly unrealistic, and thus give him a way to indefinitely postpone fulfilling his own threats against Moscow.

The most clearly and deliberately unrealistic demand is the imposition of tariffs against China and other buyers of Russian oil, whether addressed to NATO (as Trump does) or the G7 (as Bessent does). One G7 country, Japan, has already stated that it will not consider such a move, since these tariffs would breach WTO rules. The United States itself, as a member of both NATO and the G7, is currently engaged in improving relations with China (having finally reached an agreement over the future of TikTok’s US operations), is looking at tariffs in the 30% range, and is hardly likely to re-enter a sharp trade war over Russian oil – a conflict it has already been forced to back down from.

However, Bessent stressed that Washington expects the EU above all to introduce tariffs. But this scenario is also utterly implausible. It is not just that, according to the European Commission, tEU–China trade in goods reached €732 billion in 2024. The use of prohibitive tariffs to achieve political or economic goals is a Trumpian invention, which European politicians unanimously condemn. EU trade policy is based on other principles, consistent with WTO rules and rejecting tariff wars. When Trump, upon entering the White House, launched them against practically every country, including the EU, the logical response for the Union was to form a coalition with Canada, Mexico, Brazil and South Korea – America’s key trading partners – to push back, as experts at the Kiel Institute for the World Economy have pointed out. Now Trump is demanding that Europe, on the contrary, join his tariff policy and become part of it. Nobody, including Trump himself, doubts that the EU will refuse.

But even if one sets aside the legal and political aspects, Trump’s demands in practice would mean the G7 and NATO countries simultaneously imposing prohibitive tariffs on trade with China, India and Turkey (the third largest importer of Russian oil and fuel products). This would trigger absolute economic chaos in world trade and the global economy, with unpredictable consequences. Therefore, in its current form, Trump’s ultimatum should be seen precisely as a safety wedge, allowing him to delay imposing his own pressure measures on Russia, while shifting the responsibility onto his European partners.

When we say ‘oil,’ we mean ‘gas’

At the same time, the first part of Trump’s ultimatum – the demand that 'certain' countries cease purchasing Russian fuel – is not without foundation. Europe is indeed still buying Russian oil and fuel products in significant volumes to maintain its energy balance. This problem can be broken down into three issues: 1) Turkey's purchases of Russian fuel products and their re-export to EU countries, 2) Hungary and Slovakia's purchases of Russian oil and pipeline gas, and 3) EU countries' purchases of Russian liquefied natural gas.

The fact that Trump’s ultimatum is addressed not to the EU but to NATO is no accident and points to Turkey’s role in importing Russian energy resources. According to data from the Centre for Research on Energy and Clean Air (CREA), as of January 2023, China accounted for 42% of Russian oil supplies (by value), India for 32%, and Turkey for 16%. Looking at Russian fuel purchases overall, in the first eight months of this year India’s imports totalled €31.6 billion, while Turkey’s came to €20.8 billion, i.e. two-thirds of India’s figure, thanks to significant volumes of gas imports.

Moreover, Turkey has long acted as a transshipment point for Russian energy products. According to data from CREA and the Centre for the Study of Democracy (CSD), between February 2023 and February 2024, in the first year of the embargo on Russian oil and oil products to G7 countries, Turkey more than doubled its imports of petroleum products from Russia and almost simultaneously increased its exports to the EU. According to Politico, Turkey's revenues from re-exports amounted to €3 billion in the first year alone. The EU finally banned Turkish re-exports in July this year as part of the 18th package of sanctions (however, Trump was most likely relying on analytics relating to the previous period). At the same time, Turkey, as is well known, has not joined Western sanctions against Russia, and neither the EU nor Washington (save through tariffs) has any levers to compel it to abandon Russian imports.

Value of Russian oil and gas exports after 1 January 2023, in euros

Hungary and Slovakia are capable of giving up Russian oil in a short timeframe, contrary to their own assertions, according to CREA analysts. Hungarian oil and gas company MOL claims that modernising its refinery to process non-Russian crude will cost €500 million, and has proposed that the EU leadership allocate these funds as a condition for an earlier cessation of Russian supplies. However, CREA analysts point out that MOL’s refineries have previously handled non-Russian oil (in 2019, the company had to diversify its supply due to contamination in the Druzhba pipeline). Claims that Hungary and Slovakia cannot meet their needs without Druzhba supplies are also unfounded. The capacity of the Adria pipeline, through which they can receive oil from Kazakhstan, is 14.4 million tonnes per year, CREA notes.

European officials who spoke to Politico hope that the US position will provide the European Commission with an additional lever to pressure Hungary and Slovakia to abandon Russian energy imports. This goal remains significant for sanctions policy, but even if it is implemented swiftly, Kremlin revenues would not be severely affected. According to CREA estimates, Hungary and Slovakia accounted for 3.3% of Russian oil exports in value terms for the entire period from January 2023 to the present. In August, Hungary purchased €176 million worth of Russian oil, Slovakia €204 million; in July, the figures were reversed: Hungary €200 million, Slovakia €169 million. Meanwhile, Russia’s total revenue from crude oil exports in August, according to CREA, was €7.2 billion. Thus, Hungary and Slovakia accounted for just over 5%. On an annual basis, Russia would lose roughly €4.4 billion, which is about the same as it would lose in a single month if India stopped buying Russian oil (→ Re: Russia: Surplus oil).

But Europe pays much more for Russian gas. In the first half of 2025, Russia earned €7.74 billion from these gas sales, according to Eurostat. From this year, TurkStream became the only channel for Russian pipeline gas to Europe, yet EU countries paid €2.9 billion for it in the first half of the year (including Hungary €1.5 billion and Greece €0.7 billion). Liquefied natural gas accounted for €4.48 billion. In total, the EU imported €10 billion of Russian energy in the first half of the year alone. This represents 10% of Russia’s total mineral product exports in the same period ($110 billion, according to Russian customs) and around 40% of the revenue Russia earned from oil exports to India during the same period.

This is likely the argument that Donald Trump heard from his advisers or from Indian negotiators protesting US tariffs imposed on India for buying Russian oil. In Trump’s rhetoric, it became, in his words, an accusation levelled at Europeans as early as 4 September that they want to fight Russia at America’s expense (the additional tariff imposed on India would also harm the US economy).

Europeans claim that they cannot quickly abandon Russian energy sources. The current version of the EU's REPowerEU energy strategy envisages full decoupling by 2028. The plan includes a ban on new contracts from 2026, the completion of short-term contracts, and then the cessation of long-term contracts. Supplies to Europe are mostly governed by long-term agreements concluded before the war began, according to experts at the Oxford Institute for Energy Studies. Imposing a ban on Russian supplies will not terminate these contracts or release European consumers from their obligations; companies are currently assessing their legal risks.

The US, however, holds a different view. Last week, US Energy Secretary Chris Wright, who visited Brussels at the same time as O’Sullivan travelled to Washington to discuss new sanctions on Russia, said that the EU could completely abandon Russian gas within six to twelve months, replacing it with US supplies. He directly linked such a scenario to increased US pressure on Russia.

In July this year, to end the trade war with the US, the EU not only agreed to a substantial increase in tariffs on its goods but also expressed willingness to purchase $750 billion of US energy by 2028, i.e., by the end of Trump’s presidential term. The Financial Times called this commitment a ‘pie in the sky’ that flatters Trump's megalomania but is unlikely to become a reality. Last year, the EU imported €76 billion worth of energy from the US, according to senior Kpler analyst Laura Page in an interview with Politico. Total US oil and gas exports in 2024 amounted to just $166 billion. To reach $750 billion by 2028, the US would have to redirect its entire energy export to the EU, increasing it by 1.5 times as early as next year (to $250 billion).

The July trade agreement does not impose obligations on the EU – it is merely an intention. In practice, the current REPowerEU plan does not envisage an increase in US gas imports. Wright’s visit to Brussels immediately after Trump issued his ultimatum points to its second 'hidden agenda.' Trump evidently intends to force Europe to buy larger volumes of more expensive American gas to replace Russian supplies – and faster than Europeans currently plan.

Thus, as often happens, absurd populist demands, rational grounds, and practical objectives are tightly intertwined in Trump’s ultimatum.

Tariffs or sanctions? Or neither

European diplomats, as has often been the case, intend to appease Trump and reduce the absurd ultimatum to practical agreements and compromises. On the evening of 16 September, European Commission President Ursula von der Leyen stated that she had a productive conversation with the US president. The 19th sanctions package will be presented shortly. Its measures, as expected, will target cryptocurrency projects (according to Table.Media, this is the main focus), banks, and energy. She also emphasised that the Commission would propose accelerating the phasing out of Russian fossil fuel imports. The current REPowerEU strategy envisages that the exit from both oil and gas should be complete by 1 January 2028. Von der Leyen has previously indicated that the process needs to be accelerated and the timeline revised. Trump’s pressure will provide momentum and could prove productive in this respect.

However, Trump’s sudden ultimatum exposes a deeper problem. The EU adheres to a sanctions ideology, which implies gradually restricting Russia’s oil and gas revenues so as not to destabilise markets. Its main instruments are the price cap mechanism and secondary sanctions. However, the secondary sanctions mechanism is ineffective without US participation. Trump, by contrast, demonstrates indifference and even disdain for this approach, seeing it as 'Biden’s legacy.' As recently as June, the US blocked the reduction of the cap from $60 to $47.6 per barrel. The EU, the UK, and several other countries accepted this decision, but without US support its impact is minimal. Trump, in turn, trusts a tariff-based approach, which the EU fundamentally rejects.

The divergence in approaches is eroding the current sanctions mechanism on Russian oil, created by the G7 in late 2022. Coordination between the US and other G7 countries has broken down and as a result, Indian buyers no longer fear punishment for breaching the price cap, notes Richard Bronze, an expert at consulting firm Energy Aspects, in conversation with Reuters. Traders interviewed by the agency confirm that the cap is effectively not being observed. At the same time, it indirectly affects Russian revenues: buyers of Russian oil demand a discount, and the price gap with Brent has recently widened from $2–3 to $10 per barrel. Meanwhile, the secondary sanctions mechanism, a key component of the sanctions strategy, is weakening due to Trump administration inattention. For example, India has once again begun accepting tankers included in the sanctions lists.

For economic pressure on the Kremlin to be effective, US and EU actions must be coordinated. But is this possible if the two sides adhere to fundamentally different and opposing views on the instruments to be used?