A bipartisan group of senators on Tuesday announced an agreement on a long-awaited bill that will grant US President Donald Trump the authority to impose new sanctions and tariffs on the largest buyers of Russian oil and natural gas, while also extending the sanctions regime against Iran.
The bill allows the president to impose additional restrictions on the five largest importers of Russian energy, as well as on five countries that assist in circumventing energy sanctions against Russia. Simultaneously, it extends the US Sanctions Act against Iran.
Donald Trump has already expressed support for the bill, which was primarily initiated by Senator Lindsey Graham. A procedural vote on the bill is scheduled for Tuesday evening.
Possible consequences for world trade
While the bill has long been backed by proponents of tougher measures against Russia, its passage could complicate trade relations between the US, China, and India, which are the largest buyers of Russian energy.
Some Democrats oppose the bill, fearing that Trump may use it as a legal basis to introduce new large-scale tariffs.
On Tuesday, Donald Trump is also scheduled to meet with Ukrainian President Volodymyr Zelensky at the White House. Later, the Ukrainian leader plans to hold meetings with legislators on Capitol Hill.
The Senate is expected to approve the bill as early as this week. However, the House of Representatives has gone on August recess, meaning the final adoption of the bill may not occur until September.
What the bill provides
The bill extends the Iran Sanctions Act of 1996 until 2031. This law allows for the application of secondary economic sanctions on foreign companies doing business with Iran and was set to expire this year.
Additionally, the bill grants the president the authority to impose a general tariff of 500% on Russian goods imported into the US, along with an extra tariff of 100% on the five largest importers of Russian energy and countries that purchase Russian oil or natural gas or facilitate the circumvention of sanctions.
The latest version of the bill also limits the president’s new tariff powers to a period of five years.
Previously, the White House attempted to increase sanctions pressure on Russia, but after the closure of the Strait of Hormuz during the conflict with Iran, it temporarily made exceptions for oil trade to avoid a global market deficit. Those exceptions ended last month.
Last year, Trump imposed a 25% tariff on goods from India due to its purchase of Russian energy, but later rescinded it to promote a broader trade agreement between the US and India. China, one of the largest buyers of Russian oil, avoided similar restrictions as the Trump administration sought to prevent further deterioration of trade relations with Beijing.
Source: Bloomberg
