President Joe Biden will announce on Friday that the US will revoke the coveted most favored nation trade status for Russia over its invasion of Ukraine. The decision will echo today’s moves by the European Union and the Group of Seven countries, all of which have extensive trade ties with Russia at present as well.
Reuters and the Associated Press say that a source familiar with the matter who spoke on the condition of anonymity confirms that the momentous decision will be made to pull the plug on Russia’s trade status.
The revocation of the status could not take effect without legislation passed in Congress; however, sources tell Reuters that there already is widespread support for the move.
Russia most favored nation status revocation only latest economic blow after invasion
In the two weeks of the invasion, pressure has been building on the US to revoke what is formally called “permanent normal trade relations” with Russia as punishment for its brutal incursion into the country.
The move is necessary in order for the U.S. and its friends and allies to be able to impose tariffs on Russian imports and impose quotas on its exports.
Experts say that in 2020, the EU imported over 105 billion dollars of goods from the country, which included not only oil and gas but chemicals, iron and steel as well.
Friday’s developments come one day after banking giant Goldman Sachs announced it is closing all its operations in Russia; it is the first major Wall Street bank to cease operations in Russia after its invasion of Ukraine.
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While Citigroup officers had already said that they would wind down the bank’s activity in the country, Goldman’s announcement is more immediate. However, Citi operates a consumer banking and business banking division in Russia, unlike Goldman Sachs.
Goldman Sachs announced in a statement on Thursday that it has approximately $650 million in exposure to Russian debt. Along with other Wall Street banks, it had operated a minor-scale investment banking business in Russia for the past few years, according to the Associated Press.
Learn more: Russian invasion, sanctions already affecting world trade
Banking is just the latest industry to feel obligated to cut all ties to Russia after the invasion. International shipping companies have been left high and dry in their attempts to disentangle themselves from Russian entities, resulting in containers and vessels being stranded at sea due to economic sanctions.
Banking comprises another difficult economic web which will take time to unfurl. The loans that banks hold, as well as their deposits and customer relationships, mean that leaving the country for them will be much more difficult than merely shutting off a tap.
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