Trump’s plan to overwhelm Russia and lower prices

On the day of his inauguration, the President of the United States, Donald Trump, declared a “national energy emergency”, in order to increase the production of American oil and gas, and to lower the cost of living, which led to an increase in the prices of basic products such as apples, bacon and eggs. At the same time, he declared that he would use the field Gas and oil as a means of economic pressure on Russia, but experts doubt its ability to achieve its stated goals of lowering energy prices and bringing the war in Ukraine to an end the fastest

“We will drill, baby, drill” (“We will drill baby drill”), Trump declared in his inauguration speech. “We have something in our hands that no other industrial country will ever have – the largest amount of oil and gas on the planet, and we are going to use it.” At the same time, the president threatened the European Union with imposing tariffs on products imported from Europe to the USA, if they do not increase the total American energy purchases.

Later, in his words to reporters at the White House, Trump clarified his intentions towards the European Union: “The only thing they can do quickly is buy our oil and gas. We’ll fix it with tariffs, or they’ll have to buy our oil and gas.”

Eyal the Shaksa geopolitical-economic-security strategist (author of the book “Bridges of the Economy”), commented in his X-calculation on the economic situation in Russia on the eve of Trump’s inauguration: “Russian growth is high, to be honest. In 2024, growth of 3.6% was reported, More than the US and most European countries,” writes the Shaks, “”But this growth did not come for free,” he emphasizes, noting three main costs: inflation that has reached to 9.5%, a high interest rate of the central bank which stands at 21%, and an erosion of two-thirds of the wealth fund’s assets (government-owned investment funds that manage the state’s capital surplus – J.T.) since the beginning of the war.

 

Will Russia’s economy in the Trump era go to ruin?

I’ve written a lot here about Russia’s economy, but not with Trump as president. Trump claims he will use economic power to end the war “immediately”. But Biden tried too.

So where does Russia’s economy stand today? What tools are left for Trump? What are the scenarios for the continuation?

Thread 🧵⬇️ pic.twitter.com/MJ0mWc86lo

— Eyal Hashkes | Il Hashkes (@EHashkes) January 24, 2025

According to a Reuters report, five knowledgeable sources claim that the economic situation in Russia is already beginning to influence Putin’s decision-making, with a growing preference among his associates for a ceasefire.

However, in relation to the tariffs in question, economists warn against dangerous consequences. Sarah House, A senior economist at Wells Fargo Bank, told the New York Times that the entry into force of the tariffs that Trump is talking about, will cause an increase in inflation, and will harm the wider economy. According to her, the creation of tariffs will increase the price of products in the US, thereby endangering consumers whose wages will not be enough for the products that are expected to become more expensive. Another criticism is in the environmental aspect. “There is no energy emergency,” said Manish Bafna, president and CEO of the environmental organization NRDC to the NPR channel, ” There is a climate emergency.” The US currently produces more oil and gas than any country in world history, and production continues to rise.

The executive order signed by Trump directs administration departments to identify and exercise any legal emergency authority available to accelerate fossil energy production. At the same time, Trump canceled the freeze imposed by Biden on liquefied natural gas (LNG) export permits, which is expected to allow the continued construction of 14 new export terminals.

The Shaks points to a worrying trend in Russia: “There are interpretations that Russia is literally becoming a client state of China, in the style of mercantilist colonies from previous centuries. Russia exports raw materials (oil and gas) to China at cheap prices, and in return Buying expensive Chinese finished products,” he wrote on his X account. In addition, it turns out that Russia’s real defense budget is significantly higher than reported. “If you take into account the funding that flows with the active and aggressive encouragement of the government from banks to the defense industry, the security costs increase according to analyzes to 18% of GDP,” notes the Shaks.

In an interview with the Wall Street Journal, Jonathan Wilkinson, Canada’s minister of energy and natural resources, said he preferred “less confrontational responses” to the fight over the style of taxes on Canada’s oil exports. However, he did not rule out taking an extreme step in case of escalation by Trump and the US, such as limiting oil shipments to the US. “Nothing is out of the question in the long term,” Wilkinson said.

Trump spoke last Thursday at the World Economic Forum in Davos (via virtual broadcast) and made it clear that climate policy is not his priority. He referred to oil and gas as “the liquid gold under our feet” and spoke of “nice clean coal”. At the same time, he called on the European Union to buy more American energy to avoid tariffs, a move that puts European leaders between the American hammer and the climate anvil.

“Growth is expected to slow down in 2025,” writes the Shaks, noting that “inflation hurts most Russians, who feel prices are rising mainly in the food sector, more than the general inflation rate.” According to him, “this interest rate (also high in real terms) suppresses investment of anything that is not dictated from above”, and the government “raised taxes in the last two years, but in a measured and careful way so as not to irritate citizens too much”.

The Saxe warns that “Russia has no independent relevance to the technological race in the fields of AI (the Russian substitutes are bad), computing capabilities, etc.,” and adds that “this probably also affects advanced military R&D capabilities that will compete with future Western and Chinese technology.” .

In his analysis of Trump’s strategy, the Shaks write that “even without the cooperation of OPEC (Organization of the Petroleum Exporting Countries-J.T.) and Saudi Arabia, in the long run Trump’s policy will harm Russia because it will increase the supply of American oil, which will put pressure on prices towards Down.” However, he adds, “the claim of an ‘immediate end to the war’ is not necessary. As mentioned, Russia has reserves left, and the industrial capacity will remain largely even if the revenues from oil will be affected. And in general, the economic consideration in making decisions is far from deterministic as experience shows.”