March 11, 2022: The United States and its allies moved Friday to end normal trade relations with Russia as President Joe Biden vowed the West would make Vladimir Putin “pay the price” for his invasion of Ukraine.
Biden announced the new move, which would allow Western countries to pass significant tariff hikes to Moscow, in coordination with NATO allies, the Group of Seven and the European Union.
Washington and Brussels also said they would halt exports of luxury goods to Russia in what EU chief Ursula von der Leyen described as a “direct blow to the Russian elite”.
On the US side, lawmakers — who have the final say — have already indicated they support Russia’s preferential status guaranteeing equal treatment between international trading partners.
Biden warned in his White House speech that “Putin has to pay the price.”
And in a statement released in Berlin, G7 leaders confirmed that they would each “try” to take action to deny Russia preferential trade status.
“The United States and our allies and partners continue to step in step to increase economic pressure on Putin and further isolate Russia from the global stage,” Biden said.
Putin “cannot pursue a war that threatens the foundation of international peace and stability and then turn to the international community for help.”
An important principle of the World Trade Organization, the so-called privileged status known in the United States as Permanent Normal Trade Relations (PNTR), requires countries to guarantee each other equal tariffs and regulations.
By stripping Moscow of the December 2012 designation, Biden could impose high tariffs on Russian goods or restrict imports.
The president also announced a ban on imports of Russian vodka, diamonds and seafood into the United States.
The most recent trade sanctions limit several rounds of measures designed to sever Russia’s economic and financial ties with the rest of the world over its invasion of Ukraine.
They include a ban on Russian oil imports, seizing the assets of Putin-linked billionaires and freezing the country’s stockpile of cash.
Together, the measures have already brought Moscow to the brink of a debt crisis.
The measures have also caused prices for key commodities, such as gasoline and wheat, to rise, hurting US consumers who are already experiencing the highest inflation rate in four decades.
However, trading experts doubt that new tariffs will be effective.
“The US direct trade with Russia is relatively small, so higher tariffs wouldn’t do them much harm, but could increase the costs for our manufacturers who rely on them for key commodities,” said William Reinsch of the Center for Strategic and Strategic Planning. International Studies in Washington. †
“The additional damage this will do to the trading system, although not immediate, could be significant,” he said in an analysis.
The United States imported just under $30 billion worth of goods from Russia last year, including $17.5 billion in crude oil.
The IMF said on Thursday that war and sanctions will lead to a “sharp contraction” in the Russian economy and slower global growth.
The Washington-based lender this week approved $1.4 billion in fast-disbursing aid for Ukraine, and the World Bank also released nearly $500 million of what is expected to be a $3 billion financing package to help the war-ravaged country. help out.
US lawmakers, meanwhile, passed a massive spending bill on Thursday, including nearly $14 billion in humanitarian and military aid for Kiev as the Russian invasion entered its third week.
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