WASHINGTON (AP) — President Joe Biden announced Friday that the United States will drastically reduce its trading status with Russia as punishment for its invasion of Ukraine and will also ban imports of seafood, alcohol and of Russian 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.
READ MORE: EU steps up military aid to Ukraine, considers new sanctions against Russia
“The free world is coming together to take on Putin,” Biden said from the Roosevelt Room at the White House. He also said the countries were adding new names to a list of Russian oligarchs facing sanctions, and the United States was cutting off the flow of high-end American goods such as expensive watches, cars and clothes. .
“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 would allow the United States and its allies to impose higher tariffs on certain Russian imports, which would further isolate the Russian economy.
Biden’s changes to Russia’s trade status come as bipartisan pressure mounts 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. It comes days after Biden moved to ban imports of Russian oil and gas products.
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,” she added. noted.
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 Russian President Vladimir 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 MFN 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.
LOOK: Russian forces step up attacks on Ukrainian towns, trapping civilians in dire conditions
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 powerful House Ways and Means Committee published, then deleted, an announcement on a bipartisan bill to ban imports of Russian oil and impose new trade sanctions on the country, according to an aide, due to the White House’s pushback against acting before Biden had coordinated with allies and made a decision on both issues. The House voted Wednesday on a narrower bill to ban Russian energy imports after Biden instituted the ban by executive order.
Canada was the first major U.S. ally to revoke most-favoured-nation status from Russia last week.