The Limitations of Tariffs in a Deregulated World

Tariffs, at their core, are a form of taxation. And the inherent weakness of tariffs—particularly when used as a tool of coercion—is that their impact can be blunted by austerity, deregulation, and economic liberalization. A prime example of this is Argentina, whose economy is currently surging under the leadership of anarcho-capitalist President Javier Gerardo Milei.

Despite constitutional barriers limiting his full reform agenda, Milei has implemented sweeping austerity measures, drastically reducing regulations and slashing taxes. The result? A booming Argentine economy that is more resilient to foreign pressure, including potential tariff threats. In such an environment, external tariffs lose their leverage—there are fewer internal inefficiencies for them to exploit.

Trump’s Tariff Gamble Against India

Against this backdrop, President Donald Trump has escalated his trade war with India, imposing a 50% tariff on Indian imports. The justification? India’s continued importation of discounted Russian oil—a policy Washington interprets as indirect financial support for Vladimir Putin.

But India doesn’t see it that way. From Delhi’s perspective, it’s a pragmatic energy decision. With Russian oil priced at sustainable, below-market rates, India sees an opportunity to bolster energy security for its 1.4 billion people. And with lower energy production costs in Russia—thanks to its streamlined regulatory environment and state-owned enterprises—India’s energy calculus is unlikely to change just because Washington disapproves.

The Regulatory Divide: East vs. West

Herein lies a deeper problem for the United States: energy regulations in the West, especially in the U.S. and Canada, continue to inflate operational costs, making American energy less attractive globally. While Russia operates with fewer constraints, allowing its state-owned producers to undercut international prices, the U.S. remains mired in costly environmental and bureaucratic policies—many of which are tied to the Environmental, Social, and Governance (ESG) framework.

India, recognizing this, is exercising its leverage. Unlike smaller economies that might buckle under U.S. tariffs, India is a major player—the third-largest oil consumer in the world and a rising global power. With energy demand projected to surpass China’s by 2030, Delhi has little interest in abandoning affordable energy sources, regardless of geopolitical pressure.

Why the U.S. Has No Real Leverage

In many respects, Trump’s tariff strategy may be more symbolic than effective. India, like China, is competing for access to the U.S. market. But the U.S., burdened by high labor costs, minimum wage mandates, and currency vulnerabilities, cannot easily outcompete low-cost manufacturing hubs.

Moreover, India’s role as a major consumer economy means it can pivot to other energy partners without sacrificing its strategic interests. With the BRICS alliance expanding, India’s global trade options are growing, not shrinking.

As one Indian government official reportedly said, “We’re not financing Russia—we’re simply buying energy at a fair price.” That pragmatic stance reflects a broader global shift: nations increasingly prioritize their national interests over ideological alignment, especially in energy policy.

Canada’s Missed Opportunity

Canada, theoretically, could have played a spoiler role in this scenario—stepping in as a reliable, Western-aligned energy exporter. But Canada’s federal government remains entrenched in ESG ideology and regulatory excess, undermining its global competitiveness. While parts of Western Europe have begun retreating from ESG policies amid mounting economic evidence and energy insecurity, Ottawa has doubled down.

The result? Canada has effectively sidelined itself from the energy conversation, unable to seize a lucrative opportunity while India, Russia, and others shape a new energy order.

Climate Ideology vs. Market Solutions

Whether or not one believes in man-made climate change, the market is already adapting. Private innovation, not government mandates, will drive the energy transition—if one is even needed. ESG compliance, when enforced by activists and bureaucrats with little understanding of economics or industry, often does more harm than good.

Ironically, it’s in deregulated, market-driven economies like Argentina and Russia where the path to lower emissions and higher efficiency may be forming—not through slogans, but through reduced barriers and increased competition.

India’s Position: Stronger Than Ever

India’s government, led by Prime Minister Narendra Modi, has so far maintained a measured tone in the face of Trump’s tariff threats. But the country is clearly signaling that it will defend its energy sovereignty. In response to the tariffs, Delhi pledged to take “all necessary measures” to protect its national interests and economic security.

Despite pressure, India has already offered significant concessions in other areas, such as opening up industrial markets and facilitating foreign tech operations (including Elon Musk’s Starlink). But agriculture and energy—two sectors central to Indian livelihoods—remain non-negotiable.

Conclusion: Energy Trumps Tariffs

Trump’s tariffs may rattle markets and make headlines, but in the broader geopolitical chess game, India holds the winning hand on energy. Its diversified partnerships, growing domestic demand, and strategic alignment with low-cost producers like Russia give it options the U.S. cannot easily restrict.

Unless the U.S. addresses its own regulatory bloat and labor inefficiencies, it will struggle to assert meaningful economic leverage—especially over countries like India that are prepared to play the long game.

The U.S.-India relationship may endure, but if Washington continues to prioritize tariffs over strategy, it risks pushing its allies toward a more multipolar and pragmatic world—one where energy independence, not political loyalty, defines foreign policy.

As society drifts further from Him, the path back becomes more difficult—but never impossible.

Consider making Jesus Christ your Lord and Savior today. Through Him, all things are possible.