President Joe Biden on Friday announced that the United States and allies would revoke Russia’s ‘most-favored nation’ trade status in another blow to the Russian economy.
The move was the latest sanction following Russia’s invasion of Ukraine three weeks ago.
The U.S. and allies have pursued a series of economic sanctions against Russia in retaliation for the invasion Biden said on Friday the U.S. and the other G-7 nations (Canada, France, Germany, Italy, Japan, and the United Kingdom) will deny Russia from a favored nation status.
“As Putin continues his merciless assault the United States and our allies continue to work on the locked step to ramp up the economic pressures on Putin and to further isolate Russia,” Biden said.
Here’s a look at how this most recent round of sanctions might play out in the U.S. and elsewhere.
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What is PNTR?
PNTR stands for permanent normal trade relations. This is the legal definition that the U.S. uses when there is free trade with a foreign nation. The World Trade Organization allows countries to give each other a most favored status, meaning that goods can be exchanged between countries with lower tariffs, fewer barriers and a maximum amount of exports allowed.
What are major Russian exports to US?
Russia was the United States’ 23rd- largest trading partner, totaling$36.1 billion in two-way goods trade in 2021, according to the Census Bureau, $29.1 billion of which account for Russian products into the U.S.
In 2019, the Office of the United States Trade Representative reported the main imports from Russia to the U.S. were:
- Mineral fuels ($13 billion)
- Precious metal and stone (platinum) $2.2 billion
- Iron and steel $1.4 billion
- Fertilizers $963 million
- Inorganic chemicals $763 million
The U.S. also imports agricultural products from Russia, totaling to $69 million in 2019, including:
- Snack foods $8 million
- Tree nuts $6 million
- Other vegetable oils $3 million
- Essential oils $3 million
- Other dairy products $2 million
What about Russian oil
About 60% of what the U.S. imports from Russia is in energy, including oil, coal and natural. Russian oil accounts for about 3% of what the U.S. imports each year, but that’s enough to drive up prices for consumers.
The lack of Russian oil leaves less crude to process at refineries at the West Coast, and making costs even higher at the pump, according to University of Houston Professor Ramanan Krishnamoorti.
In 2021, the U.S. imported an average of 209,000 barrels per day of crude oil from Russia, according to the American Fuel & Petrochemical Manufacturers (AFPM).
While the amount of Russian oil in the U.S. is a fraction of the overall total, Krishnamoorti said it is important because Russia produces “heavier, sour crude,” and the U.S. depends on a balanced portfolio of fuel at refineries.
How much grain does Russia export?
Russian wheat accounts for around 17% of the global supply.
Russia will suspend exports of wheat, meslin, rye, barley and corn to the Eurasian Economic Union (EEU) until Aug 31.
Together Russia and Ukraine exported 25.4% of the world’s wheat in 2019, according to the Observatory of Economic Complexity (OEC). USDA analysts said exports from the two countries would fall to a combined 52 million tons this marketing year.
How much fertilizer does US import from Russia
The U.S. imports approximately 96% of the nation’s potassium fertilizer from Russia, including 1 million short tons per year, according to Michigan Potash & Salt Company.
In 2019, the U.S. imported roughly $299.4 million in phosphate fertilizer from Russia, making it a total of 729,288 metric tons, according to Progressive Farmer.
In 2021, the U.S. imported $1.28 Billion of fertilizer from Russia, according to the United Nations COMTRADE database on international trade.
How much Russian vodka is in the US
The U.S. imports around $24.1 million in beverages, spirits and vinegar annually from Russia, according to Bloomberg.
About 1.2% of the vodka the U.S. imports originates in Russia. In the first half of 2021 Russian vodka exports to the US were worth around $18.5 million, according to the Distilled Spirits Council of the United States.
Most of the vodka consumed in the U.S. comes from other European countries such as France and Latvia.
What about other goods, like seafood and diamonds?
The move to revoke Russia’s most-favored nation trade status would cause the U.S. tariff rate on Russian caviar to jump from 15% to 30% and levies on plywood would increase from zero to 30%, the Wall Street Journal reported. Vodka, which is now imported duty free, would be subject to a tariff of $1.78 per liter.
The U.S. imported $1.2 billion in Russian seafood last year, according to Bloomberg.
Biden also announced Friday that he will sign a separate executive order to stop end the exportation of luxury items to Russia. This order will includes high end-watches, apparel and alcohol, luxury vehicles and jewelry.