The US Senate has passed a major new bill on sanctions against Russia, which allows for the imposition of tough tariffs on oil and gas for China, India, and other major buyers of Russian energy resources, and also extends sanctions against Iran. This bill, which was actively supported by the late Senator Lindsey Graham, received bipartisan support and was passed with 86 votes to 11. Graham, a Republican from South Carolina, died last month shortly after returning from a visit to Ukraine. “This bill hits Putin where it hurts the most,” said Senator Darlene Graham, appointed to her brother’s seat, referring to the Russian president just before the vote.
The legislation was significantly narrowed compared to the version developed last year to gain the support of President Donald Trump. Trump has halted most direct aid to Ukraine, instead preferring to sell weapons to the country, often paid for by America’s European allies. The bill still has to pass the House of Representatives.
Legislators warn of risks
Some Democratic legislators and Senator Rand Paul, a Republican from Kentucky, warned that Trump could use this bill as a legal basis for broad new tariffs on major trading partners such as China and India. Paul’s amendment to block new tariff powers was not adopted. According to the bill, Trump will have the authority to impose 100% tariffs on the five largest buyers of Russian crude oil and natural gas, as well as on five countries that help Russia circumvent energy sanctions. Although senators from both parties called this measure a blow to the Kremlin, it remains an open question whether Trump will use his new powers. The White House has agreed to broad waivers that give the president significant leeway in not applying penalties.
Expansion of sanctions against Iran and other measures
The bill will also extend the Iran Sanctions Act of 1996 until 2031. This law, which was set to expire this year, imposes secondary economic sanctions on non-American companies doing business with Iran. The bill also allows the president to impose a general tariff of 500% on Russian goods imported into the USA. The new tariff powers will be in effect for five years.
Earlier, the White House made efforts to impose sanctions against Russia, but provided a number of temporary waivers on oil sales after the closure of the Strait of Hormuz during the war with Iran, which caused a crisis in the oil markets. Last year, Trump imposed a 25% tariff on Indian goods due to New Delhi’s purchases of Russian energy resources, but later canceled it to help conclude a broader trade agreement between the USA and India. China, one of the largest buyers of Russian oil, has generally avoided such penalties as Trump sought to limit trade tensions with Beijing. The USA has imposed sanctions against Russia since the beginning of the full-scale invasion of Ukraine in February 2022. However, a complex set of waivers and other loopholes allows Russia to continue selling a significant portion of its energy resources on international markets, partly because restricting these flows would have an adverse effect on the global economy.
Democratic critics of Trump warned that the sanctions bill will not have a major effect if Trump does not change course. “If he is ready to continue legitimizing Vladimir Putin and getting closer to him, sanctions will not solve the main problem,” said Senator Chris Murphy of Connecticut to journalists in the Capitol last week.
Source: Bloomberg
