How Trump could use sanctions in negotiations with Russia

January 16, 2025

By Ukraine

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In the run-up to his departure from the White House, President Joe Biden has slapped a number of major new sanctions on Russia’s financial systems and energy sector.

The U.S. originally threatened Russia with “the mother of all sanctions” as Moscow prepared to invade Ukraine in February 2022. Since then, Washington and its allies have gone after tens of thousands of Russian citizens and companies in a bid to eat away Russia’s economy and stifle its war machine.

The effects of the sanctions have taken time to kick in while Russia has managed to circumvent the bans, particularly on its energy sector. But proponents of sanctions say they are a crucial tool in the economic war with Moscow and point to Russia’s stuttering economy as an example.

They have also gotten under the skin of Russian President Vladimir Putin. He tried to get grain and fertilizer sanctions lifted by offering to revive the failed Black Sea grain deal in September 2023, to no avail.

In less than a week, President-elect Donald Trump will take over from Biden, casting uncertainty over the future of the sanctions. Trump has not yet indicated what he will do with the sanctions. He could lift certain sanctions, impose more, or simply leave everything as it is.

Experts agree, however, that Trump will follow the proposal of Keith Kellog, Trump’s Ukraine envoy who has suggested offering Russia sanctions relief as part of potential peace agreements. Trump’s advisors are currently preparing a sanctions strategy to pressure Moscow toward a peace deal, Bloomberg reported on Jan. 16.

But any change in the sanctions regime by Washington without proper coordination with allies like the U.K. and EU could undermine their efforts to contain Russia and wind up strengthening Moscow, experts say.

“If some major energy sanctions are lifted, Russia gains revenues and improves its financial situation and starts accumulating money again to produce missiles and weapons,” said Yuliya Pavytska, the manager of the sanctions program at the Kyiv School of Economics (KSE).

`Trump’s Options`

Trump will not be able to wipe away all the sanctions imposed on Russia on his first day in office. The Russian sanctions fall into two camps: executive, which the president has the power to impose or repeal on his own, and statutory, which requires going through Congress.

The easiest sanctions for Trump to lift will be those implemented under Biden’s executive order, says Yuliya Ziskina, a senior legal fellow at Razom for Ukraine, a nonprofit. These include travel bans, asset freezes, the oil price cap, bans on new investments in Russia, as well as bans on imports and exports of non-essential Russian goods like vodka and seafood.

“(Trump) could also lift technology export controls, which would be a pretty big deal because a lot of (U.S.) microchips find their way into Russian missiles,” Ziskina added.

“(Trump) could also lift technology export controls, which would be a pretty big deal because a lot of (U.S.) microchips find their way into Russian missiles.”

The statutory orders require a back-and-forth between Trump and Congress. Trump would have to make determinations to Congress to get approval followed by a review period where Congress can issue a joint disapproval if they want the sanctions to remain which in turn can be vetoed by Trump. But Trump’s veto could be overruled by Congress with a two-thirds majority.

Congressional approval will be needed if Trump wants to lift the REPO Act, which greenlights the confiscation of the roughly $4-5 billion in frozen Russian assets in the U.S, as well as sanctions imposed under the 2017 Countering America's Adversaries Through Sanctions Act (CAATSA).

`Negotiations`

Trump’s main goal will be to negotiate from a position of strength, said Steven Moore, a former chief of staff in the U.S. House of Representatives and founder of Ukraine Freedom Project, an NGO. He thinks Trump could tighten up sanctions and step up enforcement to plug the loopholes.

“Trump would be better served focusing on sanctions enforcement in the first year of his term to create some pain to which Vladimir Putin might be receptive to ending,” he said.

One of the glaring issues is Russia’s shadow fleet which negates oil and gas sanctions through a network of hundreds of tankers. Biden cracked down on the fleet last week, imposing sanctions on 183 tankers, two dodgy insurance companies, and major oil producers Gazprom Neft, which is a subsidiary of state-energy giant Gazprom, and Surgutneftegas.

Both companies produce over 1 million barrels of oil a day and make an estimated $23 billion a year, according to the U.S. Treasury.

Biden’s recent actions also include sanctions on Gazprom Bank and 50 other banks in November 2024. Most recently on Jan. 15, he imposed sanctions and secondary sanctions on 150 Russian and non-Russian financial institutions, energy companies, enterprises supporting the Russian military, and entities involved in sanctions evasion, particularly in China.

These actions could be part of the outgoing administration’s plan to “amass bargaining chips” for the next administration when Trump takes over, said Taisa Markus, adjunct professor at the University of Illinois College of Law and visiting professor at Kyiv Mohyla Faculty of Law.

“Some of these new sanctions can be lifted unilaterally by a president. Others require going to Congress perhaps revealing some desire on the part of the Biden administration to ensure the incoming administration keeps up pressure on Russia,” she said.

“Or if Putin doesn't do what Trump wants, Trump can sanction more. Under existing authority, there is a lot more a President can do in terms of imposing sanctions or enforcement without going to Congress,” Markus added.

Trump’s team has shared differing views on sanctions, which could impact his decision-making. Vice President-elect JD Vance brushed off the Russian sanctions, saying they have “gone off like a wet firecracker” and objected to the Repo Act believing it limits the president’s political power.

Marco Rubio, Trump’s pick for Secretary of State, backed the idea of using sanctions as leverage over Russia. “(Sanctions) will have to be part of this conversation in terms of bringing about a peaceful resolution,” he said, CNN reported on Jan 15.

Trump’s advisors are in the early stages of preparing a sanctions strategy, Bloomberg reported, citing sources close to the matter. This could include some relief for sanctioned oil producers if a peace deal looks likely or expanding sanctions to bolster Washington’s position.

Sanctions are only one tool in the West’s economic war, said Moore. He thinks Trump will ramp up energy production in the U.S. and increase liquified natural gas (LNG) sales to Europe to relinquish Russia’s grip on Europe’s LNG market and drive down Russian prices.

Trump could also broker a deal with Saudi Arabia to bring down the price of oil following Riyad’s decision to hike production last October which would further hinder Russia’s economy. The fossil fuel is Russia’s lifeline and it earned 12.4 billion euros ($12.6 billion) from oil exports in December alone, according to the Center for Research on Energy and Clean Air (CREA).

“Anything that can increase economic pressure is something that may keep Russia from being able to fight. That's what we're looking for,” Moore said.

`Fall out`

Lifting sanctions does not appeal to everyone, particularly in Ukraine, largely due to distrust of Putin to keep his word. In Congress, opinions are split with pro-Ukrainian politicians less likely to back lifting sanctions.

“There's a very strong argument for keeping the sanctions in place long after a peace agreement to ensure compliance,” Markus said.

“There's a very strong argument for keeping the sanctions in place long after a peace agreement to ensure compliance.”

Lifting sanctions means that Russia will be able to expand its revenue streams again. If Putin agrees to a ceasefire, he could bolster Russia’s economy and war machine and attack again if there are no security guarantees in place for Ukraine, like NATO membership.

“There has to be something very big from Putin's side, like fully getting out of Ukraine. (Lifting sanctions) is definitely not worth a ceasefire, as Putin won’t follow it,” said KSE’s Pavytska.

The consequences could be dire if Trump doesn’t act in coordination with other partners, particularly Europe. Since the sanctions are designed to work in tandem with each other, lifting U.S. sanctions would undermine European efforts and alleviate the economic burden on Russia.

This could force the EU and U.K. to bear greater responsibility and step up on their own, said Pavytska. Or it could erode unity between Ukraine’s allies.

“ If the U.S. is seen as regaining access to Russia's market while Europeans keep their sanctions in place and their companies don't get access to that market, they're at a competitive edge,” said Ziskina.

This may aggravate tension within Europe and embolden anti-Ukrainian factions within the EU like Hungary and Slovakia to push for sanction relief, she added.

In general, Congress looks at sanctions favorably as they are perceived as costing the U.S. “nothing,” Ziskina said. Trump’s administration will look at sanctions through the eyes of U.S. interests and what’s best for them.

“It's not necessarily about helping Ukraine,” she said.

“There’s more support for sanctions within Congress than there is for allocating a budget to Ukraine’s defense,” she added.