President Joe Biden will announce today that he wants to suspend normal trading relations with Russia. The move also will mirror plans by countries in the G7 and European Union.
Basically, Biden wants the United States to drop “most favored nation status” with Russia. Here’s some context. All members of the World Trade Organization grant each other “most favored nation” status. The United States also refers to it as “permanent normal trade relations.” It allows for lower tariffs between favored nation countries for goods and services. UPDATE: Biden officially announced these plans Friday morning.
Joe Biden To Announce Russia Trade Sanctions: What to Know
- The president will say that Russia no longer will have “most favored nation status” for trade.
- The EU and G7 countries are making similar decisions.
- WTO allows this status to ease trading between countries
- Tariffs on Russia could increase by up to 20 percent
- Russia ranks only 20th in providing goods to USA.
If Biden drops most favored nation status, tariffs on Russian goods will rise to the rates established by the 1930 Smoot-Hawley Tariff Act. This act, which was passed by Congress, raised tariffs by up to 20 percent.
It’s not clear what impact this plan would have on the United States. This country doesn’t trade much with Russia. The New York Times pointed out that Russia ranked 20th on the list of largest suppliers of goods to the United States. The U.S. gets oil, gas, chemicals and some metals from Russia.
Biden Already Ordered No More Oil from Russia
Earlier this week, Biden said the United States no longer would buy oil from Russia as punishment for its invasion of Ukraine. But Biden also warned Americans that such an act could make gasoline prices increase even more.
“Defending freedom is going to cost,” Biden said in his televised announcement from the White House.
Coincidentally, oil prices dropped since the announcement. In very early trading Friday morning, the price of West Texas crude, the U.S. benchmark, had dropped by a half-point, hitting $105 a barrel. Brent crude, the world benchmark, was trading at about $108 a barrel. Gasoline was trading at about $3.18 a gallon. You can check current prices here. Prices are fluid throughout the day.
Let’s circle back to the most favored nation status movements. Biden can’t sign an executive order to drop the status from Russia. Rather, it takes action from Congress. But once Biden makes the announcement, the act will be introduced in Congress.
CNN reported Thursday that bipartisan talks already had started in the Senate.
“I believe the Russians — the inhumane behavior of Russia does not justify it to get the fruits of the international community,” U.S. Sen Ron Wyden told CNN. Wyden, a Democrat from Oregon, is the chairman of the Senate Finance committee.