President Joe Biden said on Friday he is working with Congress to revoke favorable U.S. trade treatment for Russia, allowing him to raise tariffs on Russian products and returning relations between the two countries to Cold War-era status.
It’s the latest in an escalating series of economic measures the White House has taken to isolate Russia as its two-week-old invasion of Ukraine intensifies.
“The totality of our sanctions and export controls is crushing the Russian economy,” Biden said at a White House event to announce coordinated action with Canada, France, Germany, Italy, Japan and the United Kingdom as well as the European Union to suspend “most-favored nation” tariff treatment for Russia.
Biden also announced he was banning imports of Russian seafood, vodka and diamonds, which White House officials said collectively totaled more than $1 billion.
The U.S. and its allies will block Russia from obtaining new loans at the World Bank and the International Monetary Fund and impose additional sanctions on Russian oligarchs.
The United States will also cut off exports of luxury items, such as high-end watches, luxury vehicles, high-end apparel, high-end alcohol, jewelry and other goods frequently purchased by Russian elites, hitting about $550 million of annual trade.
The United States will bar any new investment by U.S. companies or individuals in the Russian economy, and will issue new guidelines aimed at preventing Russia from using cryptocurrencies to evade U.S. financial sanctions, Biden said.
Congress approved “permanent normal trade relations” with Russia in 2012, the same year that country joined the World Trade Organization. WTO rules require members to provide each other with their most favorable tariff rates, which is called “most-favored nation” status.
Biden, who has already imposed sweeping financial sanctions and technology export controls on Russia, bowed to bipartisan congressional pressure earlier this week and took the additional step of banning imports of Russian energy products.
The House was prepared to vote Tuesday to remove Russia’s PNTR status, but held off at Biden’s request. Biden thanked congressional leaders in both parties for advancing the issue, and praised House Speaker Nancy Pelosi for delaying a vote “until I could line up all of our key allies to keep us in complete unison.”
The coordinated action follows Canada’s recent decision to revoke most-favored nation trading status with Russia, and calls by Ukrainian officials for all WTO members to end business as usual with Moscow.
Commerce Department figures show the U.S. imported $17.5 billion worth of petroleum products from Russia during 2021, nearly twice as much as in 2020, as the world economy rebounded from the pandemic and energy prices rose. Precious metals, steelmaking materials, iron and steel products, seafood, chemicals, nuclear fuel materials, bauxite and aluminum, and gem diamonds were other top imports.
Russia also was the United States’ top foreign supplier of non-military spacecraft in 2021, accounting for $126 million of total imports of $263 million. The U.S. imported about $174 million of military equipment from Russia, including about $2.3 million of military aircraft and parts, the Commerce data shows.
The top five U.S. exports to Russia last year were civilian aircraft, engines, equipment and parts ($881 million); auto parts ($563 million); pharmaceuticals ($336 million); telecommunications equipment ($325 million); and passenger cars ($298 million). U.S. exports to Russia totaled about $6.4 billion in 2021.
However, unlike the EU, which is heavily dependent on Russian energy imports, U.S.-Russian trade is relatively small, totaling just about $36 billion in 2021. U.S.-China trade, in comparison, totaled over $650 billion last year.