Brics power, y'all :)))
EndGame Macro
@onechancefreedm
Today Donald J. Trump announced what he described as a major trade agreement with Indian Prime Minister Narendra Modi. The U.S. tariffs on Indian goods would fall from 25% to 18%, India would move toward eliminating tariffs and non tariff barriers on U.S. products, and New Delhi would commit to purchasing more than $500 billion in U.S. energy, technology, agricultural goods, and coal. Most notably, Trump said India agreed to stop buying Russian oil.
Publicly, the deal was framed as a reciprocal trade win and a geopolitical step toward ending the war in Ukraine by cutting off a key revenue stream for Russia. Structurally, however, this is not a traditional trade pact. It functions as a sanctions enforcement framework delivered through tariffs and market access rather than direct financial restrictions.
Energy Is The Enforcement Mechanism
For nearly two years, India benefited from deeply discounted Russian crude, often 20–30% below Brent providing a meaningful subsidy to growth, inflation control, and the trade balance. Replacing those barrels with U.S. shale or Venezuelan heavy crude is not a neutral swap. U.S. oil is priced closer to global benchmarks, while Venezuelan crude introduces quality mismatches, logistical friction, and sanctions related costs. Even partial substitution raises India’s energy import bill and pressures its current account.
That is where the leverage lies. Tariff relief is conditional. If Indian refiners materially reduce Russian oil purchases, preferential access to the U.S. market remains. If flows revert, tariffs can be reinstated. In practice, tariffs operate as a secondary sanctions tool, applied through customs and trade policy rather than banking systems or payment rails.
Compliance Is Not Binary
The dominant narrative treats compliance as an on off switch. In reality, it exists on a spectrum. Oil can be blended, rerouted through intermediaries, or repapered through third countries. History shows energy markets adapt quickly when price incentives persist. The true test of this deal will not be press statements, but whether India’s crude import mix remains structurally altered over months, not days.
Second Order Effect With China
If India steps away from discounted Russian barrels, those volumes are likely redirected most plausibly to China, often at deeper discounts. That outcome would only partially weaken Russia while quietly subsidizing Chinese industry through cheaper energy inputs. A policy intended to pressure Moscow could unintentionally improve Beijing’s terms of trade.
Why Venezuela Matters
Venezuela’s inclusion as a substitute supplier is revealing. It signals a pragmatic U.S. shift..energy price stability and geopolitical leverage now outweigh ideological consistency on sanctions. Allowing Venezuelan barrels back into circulation creates a pressure valve that helps contain oil prices while enforcing compliance elsewhere.
What This Deal Really Does
The agreement seeks to fracture the Russia,India and China energy triangle by pulling New Delhi closer to a U.S. centric energy and trade orbit. It leverages India’s reliance on U.S. market access to reshape geopolitical behavior without deploying new financial sanctions or direct confrontation.
Whether it succeeds depends on execution. The key indicators will be India’s realized oil imports by origin, the durability of tariff relief, the persistence of Russian crude discounts into Asia, and whether diverted supply ultimately strengthens China more than it weakens Russia.
My View
This is a framework of conditional coercion, using tariffs as enforcement and energy flows as leverage. The immediate optics favor the United States, but the long term outcome hinges on compliance mechanics and second order effects particularly whether strategic advantage quietly shifts to China. The headline celebrates tariffs and friendship. The real story is about leverage, enforcement, and who ultimately absorbs the displaced barrels.
