US Legislation Threatens Major Buyers of Russian Energy with 100% Tariffs

SadaNews Economy - A new sanctions legislation targeting Russia, led by the late Senator Lindsey Graham and backed by President Donald Trump, is aimed at the five largest buyers of Russian crude oil and natural gas, including China and India.

The measure, negotiated by a group of bipartisan senators, would give Trump the authority to impose tariffs as high as 100% on those countries.

The measure could increase economic pressure on Moscow to end its ongoing four-year war in Ukraine, which has resulted in about two million military casualties and caused damage to Ukraine valued at nearly $200 billion.

If Trump imposes the tariffs, it would also threaten to disrupt the already volatile U.S. trade relations with China and India.

This is not the first time the United States has attempted to punish other countries for purchasing Russian oil. Washington imposed an additional 25% tariff on India last year to penalize the country for importing Russian oil, but then backed off from those tariffs in February.

Separately, the United States granted a temporary license in April allowing countries to purchase Russian oil. This step, which has since expired, involved crude oil that would have been subject to sanctions otherwise, in an attempt to ease rising energy prices during the Iran war.

Senator Richard Blumenthal, a Democrat from Connecticut, stated at a press conference that the U.S. trade representative will determine the final level of tariffs, which is expected to be set at a level that adequately discourages the purchase of Russian oil.

The United States and China reached a trade truce set to expire in November. Trump is expected to meet with Chinese President Xi Jinping in Washington next September, with U.S. access to critical minerals from China likely topping the agenda. China has repeatedly used these minerals as leverage in trade disputes with Trump.

Support in the Senate for the Sanctions Bill

Bill sponsors are confident they have enough support to pass it in the Senate after receiving presidential backing, according to a Senate aide. However, the timeline for bringing the bill to a vote in the chamber remains unclear.

Hawks in foreign policy, led by Graham, have pushed for various versions of sanctions legislation over the past year in an effort to corner Russia's largest source of revenue, although they faced challenges in garnering White House support.

Graham and other supporters of the bill reached an agreement with the White House regarding the legislation last week. The bill was negotiated through high-level talks involving Treasury Secretary Scott Pruitt, Graham, and Democratic Senator Jeanne Shaheen from New Hampshire, according to a Senate aide.

Trump told reporters in the Oval Office on Tuesday: "This is a tribute to Lindsey." He added: "This was his project. He wanted this more than anything else."

Trump also mentioned that the bill could target Iran. He said, "They will add Iran, and that’s a very big deal." He added, "And if they do that, they might add Hezbollah as well."

Blumenthal opposed the idea of adding further provisions to the bill. He said, "This bill has been negotiated for almost two years." He added, "It’s very technical and complex." He stated, "And it will have a huge impact."

Exemptions and Opposition within the Senate

The bill includes an exemption for countries that import less than 15% of their natural gas from Russia. This allows for exemptions for allies among the largest importers of Russian natural gas, including France and Japan, according to a Senate aide.

It also adds new authority to impose tariffs of up to 100% on the top five countries facilitating evasion of sanctions on Russian oil. Other provisions in the legislation target the so-called "shadow fleet" of Russia and Chinese support for the Kremlin's defense industrial base.

Senator Rand Paul from Kentucky, in a brief interview, stated he still opposes the legislation and that he will work to delay its passage.

Some senators had pushed for the bill’s quick passage, possibly this week, but that typically requires, under Senate rules, the agreement of all members of the chamber.

Senator John Kennedy, a Republican from Louisiana, told reporters in the Capitol on Tuesday that he had just finished a phone call with Trump, during which they discussed a "serious effort" among lawmakers to move the bill forward. He added: "I’m not speaking on his behalf, but I think he’s good with the deal."