Expert: Trump's decision spares Russia from new sanctions, but the real change is the political message

President Donald Trump postponed the implementation of sanctions and tariffs against Russia that had been approved earlier this year. They were scheduled to take effect the following week. The decision did not cancel existing sanctions. It delayed a new package designed to create stronger pressure on Russia and its oil customers.

The package, developed through Senator Lindsey Graham’s initiative, could have pressured major buyers of Russian crude, such as India and Turkey, to reduce or stop their purchases. Import tariffs of 100 or 500 percent were discussed as a possible tool against countries continuing to buy Russian oil. Such measures could have sharply changed the economics of those purchases.

For now, the situation remains broadly unchanged. Existing sanctions continue, but the threat of tougher enforcement has weakened. Experts Laura Solanko and Kari Liuhto said this softer threat may matter politically and economically, because it can affect Russia’s export earnings and financial flows even without formally removing current sanctions.

A sanction is a restriction imposed to pressure a country, company, or person. It can limit trade, finance, or other economic activity. An import tariff is a charge placed on goods entering a country. In this case, the proposed measures focused on Russian oil and countries that continued buying it.

Sanctions could directly restrict dealings with Russia or make transactions more difficult. Tariffs could raise the cost of importing Russian oil for countries such as India or Turkey. The article mentions possible tariffs of 100 or 500 percent. Those charges might have encouraged buyers to reduce purchases or demand a much lower price from Russian sellers.

The package’s power would have come from combining both tools. Lower demand could reduce the price Russia receives for its oil. However, Solanko noted that there was no serious analysis showing how China, India, and Turkey would actually respond to tariffs at those levels. The measures were postponed, so their potential effects remain hypothetical.

The proposed package would have pressured countries that buy large amounts of Russian oil. India and Turkey were specifically mentioned as possible targets, while China was also identified as a major buyer. The goal was not only to punish Russia directly, but to make continued purchases less attractive for its customers.

Import tariffs of 100 or 500 percent could have made Russian oil much more expensive for those countries. They might then have reduced purchases, stopped buying, or demanded a steep discount. Liuhto suggested that Russian pressure would have increased if large buyers, apart from China, cut their purchases. Solanko said the likely responses had not been seriously analysed.

Some Russian oil could perhaps have been redirected to China or sold through other markets. Yet that would not necessarily preserve Russia’s earnings. Solanko suggested China might buy the extra oil only at a lower price. Because the package was postponed, these countries face no new measures from it for now.

Russia’s oil exports are large enough that even a modest price change creates hundreds of millions of dollars in daily revenue. Kari Liuhto said Russia exported 7.1 million barrels of oil per day last year. He used this figure to show how strongly higher prices could benefit the Russian economy.

His calculation was straightforward: if Russia received $50 more for every barrel, the extra revenue would be about $350 million each day. That amount reflects gross additional export income, not necessarily profit. Liuhto linked the increase to oil prices rising after the war involving Iran, as described in the article. The price gain therefore became a major source of financial support.

A broad reduction in demand could have erased much of that price increase. If India, Turkey, and other large buyers reduced purchases, Russia might have needed to accept lower prices. Liuhto also said Russia’s welfare fund had fallen to $45 billion in October and that the country had sold gold reserves, suggesting growing financial pressure.

Oil prices depend heavily on how much buyers want and how much sellers offer. If major customers stop buying Russian oil, Russia may have more barrels looking for fewer buyers. To keep exports flowing, it could need to offer discounts. That would reduce the revenue earned from each barrel, even if the physical oil still found a market.

The article gives a clear scale for this effect. Russia exported 7.1 million barrels daily last year, and a $50 price difference represented about $350 million per day. Liuhto said much of the recent price rise would probably have disappeared if sanctions had reduced demand. Lower prices would therefore weaken the financial benefit Russia gained from higher global oil prices.

This matters because Liuhto said Russia’s welfare fund had shrunk to $45 billion in October and the country had sold gold reserves. Stronger pressure could have tightened the government’s finances further. Since the package was postponed, that additional demand shock has not occurred.

Russia could try to redirect oil that other customers no longer buy. Solanko said oil left over from other partners might still be sold to China, although at a lower price than before. This means sanctions would not necessarily eliminate every barrel of Russian exports. They could instead change where the oil goes and how much Russia earns.

The key mechanism is bargaining power. If China or another buyer becomes one of the few available customers, it may demand a discount. Russia could keep exporting, but its revenue per barrel would fall. Solanko also noted that no serious analysis had shown how China, India, and Turkey would respond to 100 or 500 percent tariffs, so the size of any redirection was unclear.

The article does not establish how much oil China could absorb. It does say Russia has built gas infrastructure toward China, but that network remains far below Europe’s former level of dependence. The package’s postponement means this redirection scenario was not tested.

The most important change may be political rather than technical. Solanko said the decision affects perceptions of how committed the United States is to sanctions against Russia. Existing measures remain in place, but delaying the new package signals that stronger action may not arrive when expected. That can alter how governments and companies assess the risks of dealing with Russia.

Economically, the threat itself can influence buyers’ behaviour. If India, Turkey, or other customers no longer fear severe tariffs or sanctions, they may continue purchasing Russian oil. Russia can then preserve more of its sales and may face less pressure to reduce prices. The proposed package could have created a major demand shock, but that pressure has been released for now.

Liuhto said the postponement frees Putin from a tight squeeze. Solanko likewise argued that easing the threat of enforcement could affect Russian export revenues and money flows. The United States has also said it wants Europe to increase gas trade with Russia, adding to the article’s picture of uncertain policy.