WASHINGTON — President Joe Biden announced on Friday that the United States would downgrade its trade status with Russia as punishment for its invasion of Ukraine and also ban imports of Russian seafood, alcohol and diamonds.

The sweeping trade change, which revokes “most favored nation” status for Russia, is being taken in coordination with the European Union and Group of Seven countries.

“The free world gathers to confront [Russian President Vladimir] Putin,” Biden said from the Roosevelt Room of the White House. He also said countries were adding new names to a list of Russian oligarchs facing sanctions, and the United States was cutting off the flow of products. high-end American items such as expensive watches, cars, and clothing.

“We ban the export of luxury goods to Russia,” he said.

Biden has said there will be further retaliation if Ukraine is targeted with chemical weapons, a possibility administration officials have warned of in recent days.

“Russia would pay a heavy price if it used chemical weapons,” he said.

Removing most-favoured-nation status from Russia allows the United States and its allies to impose higher tariffs on certain Russian imports, increasing the isolation of the Russian economy.

Biden’s changes to Russia’s trade status come as bipartisan pressure builds in Washington to revoke what is officially known as “permanent normal trade relations” with Russia. Ukrainian President Volodymyr Zelenskyy urged the United States and its allies to take action against Russia in remarks to Congress over the weekend. This comes days after the Biden administration moved to ban imports of Russian oil and gas products.


Chad Bown, senior fellow at the Peterson Institute for International Economics, said Friday’s trade measure would raise U.S. tariffs on Russian goods by 3% to about 32% on average.

“However, the trade impact on Russia of such a tariff hike would be small, since the United States is not a particularly important export destination for Russian products,” he said. Russia was the 20th largest supplier of goods to the United States in 2019, sending mainly energy products and minerals.

Russia’s struggling economy will shrink by at least 15% this year, according to the Institute of International Finance, an association of global banks. The White House said Friday that 30 years of Russia’s integration into the global economy has been erased in just a few weeks.

“It is undeniable that the Allied sanctions have had a severe effect on the Russian economy, and it is important to remember that they would remain in place for some time even if the war in Ukraine ended today,” he said. said Daniel Tannebaum, global sanctions manager for Olivier Wyman. “And there are still other levers to be pulled.”

The president needs congressional approval to change Russia’s trade status. European changes must also be approved by national legislatures.

House Speaker Nancy Pelosi, D-California, said lawmakers would pass legislation to formalize commercial downgrading.

“Putin’s premeditated and unprovoked war is an attack on the people of Ukraine and an attack on democracy – and the House remains steadfast in its commitment to join President Biden and our allies in delivering swift and severe sanctions and stand with the Ukrainian people,” he added. said Pelosi.


The measures taken this week are the latest in a series of sanctions aimed at crippling the Russian economy and a sign that the United States and its allies will continue to use its financial clout to retaliate against Putin. Other measures include freezing central bank assets, export limits and sanctions against Russian oligarchs and their families. These financial tools have led the Russian ruble to lose 76% of its value against the US dollar over the past month, causing destructive inflation that could erode Putin’s ability to fight a protracted war in Ukraine.

Most-favoured-nation status has been a benchmark for global trade, ensuring that countries within the World Trade Organization are treated equally. Some WTO member countries enjoy special privileges due to their status as developing economies. Russia would join the ranks of Cuba and North Korea in not having the most favored nation status of the United States

The dismissal has above all a symbolic weight. Previous sanctions on Russian oil, gas and coal imports have already cut off about 60% of U.S. imports from the country, and the new import bans announced on Friday represent only about $1 billion in revenue, according to White House figures.

Russia supplied less than 1% of US vodka imports in December, according to the United States Distilled Spirits Council, and less than 2% of US seafood imports by volume, according to federal statistics.

Since Russian imports into the United States are mostly natural resources, they would typically see little or no increase in their tariffs due to their lost status, Ed Gresser of the Progressive Policy Institute in Washington said in a online message.

Instead of the current tariff rate, buyers of Russian goods would pay rates established under the Smoot-Hawley Tariff Act of 1930, which disrupted trade during the Great Depression. It would still be zero for uranium, rhodium, palladium, silver bars and king crabs. But the import tax would increase for raw aluminum, plywood, semi-finished steel and diamonds, among other products.

On Monday, Democrats on the House Ways and Means Committee posted, then deleted, an announcement about a bipartisan bill to ban imports of Russian oil and impose new trade sanctions on the country, an aide said, in because of the White House’s refusal to act until Biden has coordinated with his allies and made a decision on both issues. The House on Wednesday voted on a narrower bill to ban Russian energy imports after Biden instituted the ban by executive order.

Canada was the first major US ally to revoke most-favoured-nation status from Russia last week.

European policymakers could hurt Putin more.


Bilateral trade between the EU and Russia amounts to around 281 billion dollars per year, which is around 10 times the US-Russian trade.

The key question is what the EU is doing about tariffs on Russian energy products. Earlier this week, the European Commission, the executive arm of the union, announced a plan to cut European imports of Russian natural gas by two-thirds this year.

Russia provides around 40% of EU gas supplies, with Germany, Poland, Finland and Hungary particularly dependent on Russian sources. Austria and the Czech Republic get all their gas from Russia, according to the Institute of International Finance.

“Russia cannot flagrantly violate international law and at the same time expect to enjoy the privileges of being part of the international economic order,” said European Commission President Ursula Von der Leyen. , Friday in Versailles, France, as a preview of a fourth package of European sanctions. to present today.

Allied sanctions imposed to date have already weighed on the Russian economy. The ruble has lost almost half of its value, the country’s stock exchange has been closed for more than a week and foreign companies are fleeing.

The war also weighs on the American economy. Gasoline prices hit a record high of $4.23 a gallon this week, which will add to inflation which is already at its highest level in 40 years. And on Friday, the University of Michigan’s consumer confidence reading fell to 59.7 from 62.8 as Americans grew increasingly gloomy about the economy.

As the Russian economy collapses, Putin has started talking about retaliation. On Thursday, he approved a legislative proposal aimed at nationalizing the assets of foreign companies that have left the Russian market since the start of the war. At least 350 multinationals have abandoned or frozen their operations in Russia, according to a tally by Jeffrey Sonnenfeld, a professor at Yale University’s School of Management.

Even those backing the financial salvoes against Russia fear they will hasten a dismantling of global trade rules that generally prohibit punitive tariffs. In 2019, President Donald Trump threatened to impose an escalating series of tariff increases on goods from Mexico to force his government to crack down on immigration, but he later abandoned the idea.

Chad Bown, an economist at the Peterson Institute for International Economics, said Friday’s action could set an unfortunate precedent for the handling of routine trade disputes.

“This thing today with Russia is unequivocally OK,” Bown said. “It’s just, does that make it too easy to resort to something like this in the future?”

Information for this article was provided by Josh Boak, Chris Megerian and Zeke Miller of The Associated Press; by David J. Lynch of The Washington Post; and by Ana Swanson of The New York Times.