US: New deal on Russia, Iran sanctions

A bipartisan group of senators announced a deal Tuesday on long-awaited legislation to allow President Donald Trump to impose more restrictions on major buyers of Russian energy, as well as Iran.Trump has signaled support for the measure, which had been championed by the late Senator Lindsey Graham, and a procedural vote on it is set for late Tuesday.

The bill extends penalties on Iran and singles out Russian gas and oil exports, empowering the president to target the top five buyers of Russian crude and natural gas with tariffs, as well as the top five countries aiding Russia’s energy sanctions evasion, according to text released Tuesday.While long sought by Graham and other ardent supporters of Ukraine, the legislation could jeopardize the already volatile US trade relationships with China and India, which are top buyers of Russian energy.Also Read: Trump says tariffs won’t hurt US economy, claims levies will bring ‘hundreds of billions of dollars’ in investmentsTrump met Volodymyr Zelenskyy at the White House Tuesday morning but didn’t make a public statement.

The Ukrainian president didn’t mention the sanctions bill in his brief social media post on the session.

Zelenskyy is set to meet legislators at the Capitol later in the day.Some Democratic lawmakers oppose the bill, warning it could be used by Trump as a legal justification for broad new tariffs.“There is no question that the US government must take stronger action against purchasers of Russian energy who are fueling the unjustifiable war against Ukraine,” Senator Ron Wyden and Congressman Richard Neal said in a statement on July 14.

“But the latest draft of the Sanctioning Russia Act is a prescription for bedlam and higher tariffs.”Still, the bill has a strong chance of passing the Senate this week.

The House has left for its August recess so it would not become law until September at the earliest.Also Read: US trade deficit narrows, exports hit five-month low ahead of key GDP printWhether the administration would actually use the new powers to boost pressure on Iran or Russia remains unclear.

The White House negotiated broad waivers in the bill that give the president wide discretion not to impose penalties.“At a time when global energy markets remain under significant strain, further restricting supply risks imposing disproportionate costs on countries that are already bearing the economic consequences of today’s energy crisis,” said Brett Erickson, managing principal at Obsidian Risk Advisors.

“If the objective is to intensify economic pressure on Iran, folding additional Iran provisions into a Russia sanctions bill is unlikely to move the needle in any meaningful way,” he noted.The bill extends the Iran Sanctions Act of 1996 through 2031, preventing a potential lapse in authority.

That law imposes secondary economic sanctions on non-U.S. companies doing business with Iran and was meant to expire this year.

The bill also allows the president to impose a blanket tariff of 500% on Russian goods imported to the US and an additional 100% tariff on the top five energy importers and countries that import Russian crude oil or natural gas, or that facilitate sanctions evasion.A last-minute change to the bill this week limits the new tariff authority to five years.The White House has previously made efforts to impose sanctions on Russia, but granted a series of temporary waivers for oil sales after the closing of the Strait of Hormuz during the war with Iran triggered a global squeeze on oil markets.

Those expired last month.Last year, Trump slapped a 25% tariff on Indian goods over New Delhi’s Russian energy purchases, but later lifted it to help seal a broader US-India trade deal.

China, one of Russia’s largest oil customers, escaped similar penalties altogether as Trump has sought to limit trade tensions with Beijing.The US has piled sanctions on Russia since the start of the full-scale invasion of Ukraine in February 2022.

A complicated patchwork of waivers and other loopholes allows Russia to continue to sell a large portion of its energy resources into international markets, in part because restricting those flows would have an adverse impact on the global economy. ...