President Joe Biden and other western leaders announced plans to further isolate Russia from the global trading system.
This is in response to President V. Putin’s invasion of Ukraine.
Further stating, they would cut off normal trade relations and take other steps to cut off Russia’s ties to the global economy.
The sanctions imposed on Russia would enable nations to apply higher tariffs on Isolate Russia exports. Additionally, banning Russia from borrowing money from multinational institutions, like the International Monetary Fund and the World Bank.
The European Union and other groups of 7 countries have agreed upon these terms.
Mr. Biden also shut down new trade routes between the US and Russia, including profitable imports such as seafood, vodka, and some diamonds.
According to the White House, this would cost Russia more than $1 billion in annual export sales.
Luxury items such as high-end watches, automobiles, alcohol, jewelry, and apparel will also be banned from being exported to Russia and Belarus. The European Union has imposed its own set of restrictions, including a ban on Russian iron and steel imports.
The steps, according to Mr. Biden, “will be another great loss to the Russian economy.” He said that Russia was “already suffering very hard” as a result of the sanctions and that the Russian stock market still hadn’t opened as a result of the West’s economic pressure.
Mr. Biden predicts that once it opens, “it will blow up.”
However, the White House has been under pressure to respond to Russian strikes in Ukraine.
Russia’s special trade position comes from its membership in the World Trade Organization. This allows all members to offer each other “most favored nation” trading status. Thus, allowing goods to move freely between countries at lower tariff rates.
According to Chad P. Bown, a senior fellow at the Peterson Institute for International Economics, the measure would increase US duties on Russian goods from 3% to almost 32%.
“However, because the United States is not a particularly large export destination for Russian products, the trade impact of such a tariff hike on Russia would be limited,” he said.
In 2019, Russia was the 20th-largest provider of goods to the United States, shipping mainly energy and mineral exports.