The odds of a ceasefire in Ukraine are higher than most people think – but nobody said the path would be smooth.
This past week, U.S. President Donald Trump began slapping “secondary tariffs” on countries like India that import oil from Russia.
The goal is to force Putin to commit to a credible ceasefire negotiation – and thus create a global “peace dividend” that would boost Trump’s presidency and economic sentiment.
The problem is that Trump has limited willingness to incur pain on Ukraine’s behalf – while other countries have a high willingness to incur pain for their sovereignty and energy security.
India stays neutral, at least toward Russia
India, for instance, now faces a 25% tariff for supporting Russia’s economy, in addition to the 25% “reciprocal” tariff arising from Trump’s broader tariff onslaught.
India imports about 39% of its oil from Russia, 9% of its coal, and 9% of its overall goods. Oil consumption makes up 4.7% of its GDP. India’s exports to the U.S. make up about 20% of total, or 2.2% of GDP. That is comparable to Russian oil imports, but the tradeoff looks tougher on paper than it really is.
India would rather suffer a blow to manufacturers than see its entire social stability upended by rising domestic fuel prices.
While there are ample substitutes for the 1.7 million barrels per day that Russia ships to India, India is not inclined to accept U.S. dictation over its resource supply security. India is also negotiating with Russia over whether to buy fifth-generation Russian fighters.
The U.S. can afford to maintain punitive measures on India, but it is questionable policy. India accounts for 2.9% of American imports, which is small but not negligible. It exports pharmaceuticals, which are important for voters.
The U.S. faces a strategic setback if it alienates a rising global power that it needs to counter China over the long run.
For that reason, the Trump administration will quickly seek a solution with India. But only after it makes progress on Russia and Ukraine.
India’s historically neutral and non-aligned status has received a boost, though it will still work with the U.S. to counter China in future.
U.S. and China stumble toward a shallow deal
China is next in line for secondary tariffs, with the so-called “tariff truce” set to expire on August 12.
Talks with China did not go well in Stockholm last month. Neither Trump nor Xi confirmed that the truce negotiated in Geneva in May would be extended by three months.
If Putin rejects Trump’s offers, then Trump may be forced to raise tariffs and increase leverage in the near term. But it would be temporary and part of the negotiating process.
The Trump administration still wants a “Phase Two” trade deal with China. It is already loosening high-tech export controls.
Trump may also be sidelining Taiwan’s president. The latter’s humiliating defeat in a recall election last month removes an obstacle to a U.S.-China trade deal.
The top issues for American voters right now are inflation and prices (21%) and the economy and jobs (14%). Foreign policy is low on the list at 1%, according to a July poll by The Economist/YouGov.
Trump’s general approval rating stands at 47%, but his net approval rating is negative and his approval on handling the economy has fallen to 41%. That comes after half a year of trade war.
Indeed, while 77% of Republicans support the trade war, only 31% of independent voters do, according to the same pollster. Independents and establishment Republicans will be critical to fending off the midterm curse in 2026.
Moreover, the odds of China cutting off Russian oil, beyond superficial gestures, are low.
China’s strategic interest lies in a de facto alliance with Russia, so that it can improve its supply security over time.
An increasingly coherent Eurasian strategic partnership would help to shield the Chinese population from any shocks imposed by the U.S. and its fellow maritime powers. Especially in the event of a conflict over Taiwan or China’s desired sphere of influence.
Hence Trump’s goal with China is merely to get more concessions. He wants to expand U.S. access to foreign markets, increase net exports, and keep the economy booming.
Trump cannot afford to jeopardize the China deal, the bull market, the economy, and the midterm elections all for the sake of Ukraine.
He needs to get all the hard work done and the negative economic surprises over with by Christmas, or at least well before summer 2026, when midterm voters start to make up their minds.
After the midterm, the U.S.-China trade war is likely to return with a vengeance.
Russia accepts a ceasefire… only to rebuild
Russia ultimately has an interest in a ceasefire, especially one that does not require it to return the conquered territory.
Russia has spent nearly 20% of GDP on this war – compared to the U.S.’s 1% of GDP on the Vietnam war – and it has lost over 200,000 soldiers with a population of 144 million, whereas the U.S. lost 58,000 with a population of 216 million in 1975.
About 60% of Russians believe peace talks should begin, according to the Levada Center. Russia is not driven by popular opinion in the same way as the democracies are, but the widening gap between means and ends still points to a change in state policy.
Oil and gas revenues, at $131 billion, are now falling beneath estimated defense spending, at around $195 billion. Yet crude oil prices remain weak in the context of U.S. coordination with its Gulf Arab allies, who are increasing oil supply.
It makes little sense for Russia to spurn Trump, who is eager for a deal, and reunite the U.S. with Europe… and NATO with Ukraine. Russia will always say it is willing to fight a forever war in its propaganda, but the material interest in a ceasefire is strong.
The takeaway is that, while President Trump may crank up the pressure on Russia and its oil customers in the near term, he will need to de-escalate shortly. Everybody knows it – and nobody is willing to sacrifice their long-term energy security to avoid temporary tariffs.
At the same time, Russia will eventually accept a ceasefire. The problem is that it will only bring a ceasefire dividend, not a durable peace dividend. By its nature, the Russo-Chinese bloc will continue to clash with the U.S. and its allies over the long run. As for India, its balancing act will continue.
Matt Gertken is Chief Geopolitical Strategist at BCA Research
