Biden called these measures “another crushing blow to the Russian economy,” which was hit hard by sweeping financial sanctions announced in the wake of Moscow’s invasion of its neighbor on February 24. The United States and Europe cut off major Russian banks from global financial channels, blocked the country’s access to advanced technologies, and Blacklisted Wealthy Business Executives Who supports Putin’s rule and benefits from it.
“The free world is uniting to confront Putin,” the president said in statements from the White House.
The president needs congressional approval to change Russia’s trade status, end its so-called “permanent and normal trade relations” and treat the country as a pariah alongside countries like Cuba and North Korea. European changes must also be approved by national legislative bodies.
Friday’s actions will escalate allies’ “maximum pressure campaign”, although it dwindles along with measures already imposed, including a ban on US purchases of Russian oil, according to Elena Rybakova, deputy chief economist at the Institute of International Finance.
In a largely symbolic move, the administration is also planning to ban imports of Russian seafood and alcohol, which amounted to $550 million last year. Biden plans to ban US exports of luxury goods favored by the wealthy Russian oligarchs who support Putin.
The United States has already halted imports of Russian oil and energy products, which accounted for about 60 percent of the $26 billion in goods that American buyers imported from Russia in 2021. Biden’s announcement will have limited impact on future U.S. purchases from Russian companies, according to Ed Greiser, who led the US Trade Representative’s economic research unit until last year.
This is because the policy change, if approved by Congress, would reimpose import duties enshrined in a notorious piece of legislation known as the Smoot-Hawley Tariff Act of 1930. The measure, which many economists say deepened the Great Depression, imposed duties High tariffs on foreign-made goods. But it left the raw materials largely intact, in order to benefit American factory owners.
“Russia is quite unusual as a large, complex, natural resource-producing economy,” said Greiser.
For some important Russian products — such as palladium — tariffs will remain at zero, Greiser said. Industrial metal is used to make catalytic converters for automobiles. Other imports such as plywood, which enter the United States on a duty-free basis, will be subject to a 30 percent import duty.
European policymakers could do more damage to Putin’s economic empire.
Bilateral trade between the EU and Russia is about $281 billion dollars annually, nearly 10 times the trade between the United States and Russia. (Canada announced last week that it would strip Russia and Belarus of their preferred country status, and would subject goods from those two countries to a new 35 percent tariff.)
The main question is what the EU is doing about tariffs on Russian energy products. Earlier this week, the European Commission, the union’s executive arm, announced a plan to cut European imports of Russian natural gas by two-thirds this year.
Russia provides nearly 40 percent of the EU’s gas supplies, and Germany, Poland, Finland and Hungary rely in particular on Russian sources. Austria and the Czech Republic get all their gas from Russia, according to the Institute of International Finance.
“Russia cannot flagrantly violate international law and, at the same time, expect to benefit from the privileges of being part of the international economic system,” European Commission President Ursula von der Leyen said Friday in Versailles, France, in a review of a fourth European sanctions package. It is served on Saturday.
Allied sanctions imposed so far have already affected the Russian economy. The ruble has fallen, the country’s stock market is closed for more than a week, and foreign companies are fleeing.
The war is negatively affecting the American economy as well. Gasoline prices hit a record high of $4.23 a gallon this week, which will exacerbate inflation that has already reached a 40-year high. The University of Michigan’s consumer confidence reading fell on Friday to 59.7 from 62.8, as Americans became increasingly pessimistic about the economic outlook.
The president said the allies would also seek to deny Russia the ability to borrow from the International Monetary Fund and the World Bank.
“Putin is the aggressor and he must pay the price,” the president said.
“Incurable bacon nerd. Lifelong tv aficionado. Writer. Award-winning explorer. Evil web buff. Amateur pop culture ninja.”