TACO with Putin

As Steve Witkoff lands in Moscow, ahead of the new August 8 deadline imposed by Trump to see if Putin is serious about peace in Ukraine, Trump is already backing down.

See comments over past 24H softening (denying actually) his threat to impose 100% secondary tariffs on countries buying Russian energy.

https://x.com/mylovanov/status/1952963391498096998?s=46&t=32_q5q9ehPzOjr0pU8ggAQ

This is despite Trump clearly making the below comments on the 100% on July 14:

“We’re going to be doing very severe tariffs if we don’t have a deal in 50 days,” Trump says. “Tariffs at about 100%, you’d call them secondary tariffs. You know what that means.”

Classic Trump I guess but normally in real war situations when people are actually dying what you say is really important.

It looks to me as if Trump is backing down or chickening out - perhaps someone has told him what 100% tariffs on Russian energy exports would mean for global oil prices and the price of gas at the U.S. pump. It will drive prices much higher as it will in effect take Russia’s 9% of global oil exports off the market.

Trump is not, and was never going to impose a 100% tariff on countries importing Russian energy. Putin knew that, India knows that and so do global energy markets which priced in zero probability of that ever occurring. Oil prices hardly moved.

To Putin this will be yet another example of Trump caving in to Russia - and providing further incentive to Moscow to carry on the long war.

Notable that the Trump administration is now briefing that they will instead roll out yet more sanctions on Russia’s shadow fleet of oil tankers. These are welcome but hardly touch the sides in terms of actually hurting Russia and making a difference so as to force Putin into serious peace talks.

Interesting also this week as the U.S. threw Ukraine a couple of hundred million bucks in military supplies. Again this does not touch the sides in terms of the military equation for keeping Ukraine in the war. Symbolic I guess in terms of its the first significant U.S. kit roll out to Ukraine under Trump. It kind of spares Trump blushes on his inevitable climb down to Putin.

Putin might have also offered Trump an exit route with the half hearted offer of an aerial ceasefire - but these have been suggested in the past and all came to nought. It’s just bluff/buying time for Putin who sees more advantage than risk at this stage in waging the long war. Trump could have changed that calculus by doing much more on the sanctions front and massively increasing arms supplies to Ukraine. But Trump fluffed his lines and in his show of well overdone, undeserved respect for Putin revealed to Putin his own weakness, and Putin’s advantage.

There are plenty of sanctions which can hurt Russia: a) actually enforce existing sanctions with secondary sanctions with real penalty - increase the price on those helping Russia break sanctions; b) finally seize the $330 billion in CBR assets and allocate them to Ukraine so as it has ample resources to funds its own defence - and not dependent on the to feed of Western support; c) actually the 100% tariff idea is just not realistic but how about a 10-15% tariff on Russian exports which can be collected and given to Ukraine to fund the war/for war reparations. Russian exports are around $400bn so a 10-15% tariff would yield $40-60bn. That would cover potentially two thirds of Ukraine’s war financing needs. But it would not crater global oil and commodity prices. It would though take those funds directly out of Putin’s pocket. d) I still like the idea of making the default for international business no trade with Russia - and to partake in trade you need a special licence. Implementations could be staggered - 2-3 year timeline for introduction to limit extreme market impact. But the message to Western business at least should be stop doing business with Russia. This would delay longer term trade and investment into Russia - imposing an economic winter on Russia.

But I guess in the end it is clear that Trump simply does not want to confront Putin. Why? Maybe risking an all out war with a fellow nuclear power is part of it. Or perhaps there is something in Trump’s past that inspires him to pull the punches on Putin.

I guess in any way Trump will be focused on the Armenia - Azerbaijan peace this week as he tries to change the news cycle to a win, as President Aliev and PM Pashinyan gift Trump the photo op in the WH of a historic peace deal. This is a defeat for Moscow - which has long been stirring things up in the South Caucasus and dragging conflicts out to create dependency on it from Yerevan and to a lesser extent Baku. But because of Putin’s disastrous war in Ukraine those shackles of dependency were at least broken for Yerevan and Baku. And both are now looking to carve out new relations independent of Moscow.

Trunp will try to push the idea that he has been the big peace maker in the Armenia - Azerbaijan conflict even though he has failed with Russia - Ukraine. I would even argue that Trump’s mismanagement of the latter peace process has extended the war.