Concerns are mounting in the United States as Congress debates a bill aimed at strengthening sanctions against Russia. This legislation proposes mandatory restrictions on Russia and its allies, alongside potential tariffs for buyers of Russian energy resources. The White House is also contemplating extending sanctions to Iran and Hezbollah.
Meanwhile, the Trump administration is reassessing its sanctions policy, suggesting that excessive financial restrictions could drive countries to seek alternatives to the US dollar. Reports indicate that the US Treasury is already reducing its sanctions list, removing individuals and companies that no longer pose a threat and easing certain restrictions on Venezuela, while temporarily allowing transactions involving Russian and Iranian oil.
A study by the National Bureau of Economic Research (NBER) noted an increasing trend among banks in Russia, Belarus, Kyrgyzstan, and Myanmar to conduct transactions in Chinese yuan due to US sanctions. Outside these nations, however, the shift away from the dollar remains minimal.
According to the International Monetary Fund, approximately 57% of global currency reserves are still held in US dollars. Nevertheless, the Trump administration is considering additional measures to bolster the dollar’s role, including expanding currency swaps with allies.
US Treasury Secretary Scott Bessent previously stated that sanctions should be targeted and temporary, as prolonged use without achieving results could lead to unforeseen consequences. Reports suggest the White House insists that the president retain the authority to suspend or forgo sanctions if necessary for negotiations with US adversaries.
Context
- The “Hellish” sanctions bill was introduced in the US Senate on May 1, with Republican Senator Lindsey Graham reporting support from 72 senators.
- On May 18, in an interview with CBC News, Secretary of State Marco Rubio indicated that the US would likely impose new sanctions on Russia if peace in Ukraine is not achieved, including 500% tariffs on imports from countries buying Russian energy resources. Later, The Wall Street Journal reported that the Trump administration pressured the Senate to soften the sanctions bill.
- Before his death, Graham visited Ukraine in July, where he informed President Volodymyr Zelensky of a consensus reached with the White House regarding the sanctions bill version that would be supported by the administration.
- On July 14, the Senate presented a revised version of the “Hellish” sanctions bill, which softens proposed tariffs on third-party buyers of Russian oil and gas to a maximum of 100%, down from an initial proposal of 500%. Additionally, it includes exceptions for countries purchasing less than 15% of Russian gas and effectively reducing that import. Reuters suggests this might apply to Japan, France, Hungary, and Belgium. The new bill also allows the US president to rescind sanctions if deemed in the “national interest of the US.”
