Logistics News | April 2022- US Considers Revoking Fair Trade Relations with Russia

Sahil Jain
Due to its deadly invasion of Ukraine, Russia may lose its “most favored nation” status & face further US sanctions, making exports subject to higher duties. Effects on the supply chain may be delayed, as other countrie; goods may be then preferred for competitive prices.

Due to Russia’s violent invasion of Ukraine, the USA is planning to revoke the normal trade with Russia. The United States House of Representatives has approved a bill to suspend normal trade relations with Belarus and Russia, subjecting these countries’ products to tariff rates reserved for non-favored trading partners. The legislation is expected to be signed into law by President Joe Biden soon afterward – bringing an end to America’s recent enthusiasm toward increasing economic ties between Minsk & Moscow.

US Suspension with Russia

The move could have a significant impact on the supply chains of companies that export to or import from Russia. For example, U.S. tariffs on Russian steel and aluminum were lifted in 2019 as part of a joint effort to increase trade between the two countries. If those tariffs are reinstated, it would make Russian metals more expensive for American manufacturers that use them.

The USA’s decision to suspend trade relations with Russia will have a significant impact on the supply chains of companies that export to or import from Russia.  American tariffs on Russian steel and aluminum were lifted in 2019 as part of a joint effort to increase trade between the two countries. 

How it Affects the Supply Chain

This could also lead to disruptions in the supply of certain products if American companies decide to source them from other countries instead of this move could also affect other industries, such as the oil and gas sector. Russia is one of the world’s largest producers of oil and natural gas, and U.S. companies have been working to increase their exports of those commodities to Europe in recent years. If the U.S. government imposes sanctions on Russian energy companies, it could limit the ability of American firms to participate in that market.

However, there are still other imported products from Russia that are not yet properly sanctioned such as fertilizers, certain machinery, and even seafood. It is still unclear how soon these products will be hit with U.S. tariffs.

In the meantime, companies that import or export to Russia should begin preparing for the possibility of increased costs and supply disruptions. They may need to find new suppliers or reconsider their sourcing strategies. American manufacturers that use Russian metals will also need to weigh the costs and benefits of continuing to do business with that country

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