During a session of the Senate, a proposed bill suggested revoking Russia and Belarus’s position from the “Most-favored Nation Status” or “Permanent Normal trade relations (PNTR)” following Russia’s attack in Ukraine. The US bans Russian oil imports as a direct result of the Russia-Ukraine war.
US legislators unanimously voted upon the motion to suspend trade ties with Russia and ban oil imports. The Chamber passed another bill that banned supplies such as oil, gas, and coal from the Russian state.
Currently, the bills are headed toward President Joe Biden’s office, as the House of Representatives signed off on the amendments to both bills this past Thursday.
US BANS RUSSIAN OIL IMPORTS: THE IMPACT ON REGIONAL TRADE INDUSTRY
Abandoning the standard trade ties will straightaway affect the prices of multiple imports from Russia. Once they pass the bill, it will open doors for sanctions, leading to further increases in the prices of imports from Russia.
According to Column 2 of the US Harmonized Tariff Schedule, the new rates will be disclosed for the upcoming imports from Russia. Other than Russia, only two countries, Cuba and North Korea, do not have normal trade relations with the US; countries that aren’t on the list have to pay a different tariff.
Chair of the House Ways and Means Committee, Kevin Brady addressed the house floor this Thursday and summed that the energy import ban will impact 60% of Russian imports to the United States. The previous sanctions banned around 40% of the Imports. Combined provisions will knock off 100% of Russian imports, eliminating any US financial aid to Russia amid the Ukraine war.
The trade will also affect US industries significantly. For instance, the Steelmakers in the United States depend heavily upon the imported ferroalloys from Russia that are used in making steel. Banning Russian imports will highly impact their manufacturing and production operations, resulting in increased prices.
Huge companies such as Cleveland-Cliffs and Nucor Corporation have come out and shown concern as they depend severely on Russian Iron ore imports and metal scrap products. In a statement released by Nucor they stated; “If political conditions in those countries or their relations with the United States or each other further deteriorate, or such countries were to become subject to sanctions or other restrictions or interruptions in trade with the United States, it may materially affect the price and availability of scrap and scrap substitutes”.
Russia exported over $11.9 Billion worth of products to the United States in 2020. The exports mainly included refined Petroleum worth around $4.62B, the other major export was Platinum, which was estimated at $2.16B, and Crude Petroleum exports were estimated to be $979M; most of the exports will remain unaffected by the sanctions and bills. Palladium, platinum, and fertilizers will not significantly shift prices.
The Biden administration is looking determined to keep cutting off financial ties with Russia. Congress approved the bill that was presented by Joe Biden almost a month ago, addressing the ban on Russian imports. The Senate changed and updated a few of the bits but, at large, accepted what it is. This bill will provide Joe Biden with the open hand to further increase the rates on Russian imports.
Furthermore, we are receiving more news regarding Human rights violations in Ukraine by Russian troops. These developments have caused the removal of Russia from the Humans Rights Council. We can only expect the tension to keep rising. Also, the United States to keep putting more financial and international pressure on Russia through international sanctions and a ban on imports.