Trump sanctions a trade war

US President Donald Trump has signed has signed a bill that has legally put sanctions on Russia.

At the same time, he accused the Congress of overreach on the legislation and deemed it “flawed.”

Background

In July, the US Congress overwhelmingly voted to impose harsh sanctions on Russia for its alleged role in tampering with the US elections. The bill targets Russian energy, financial, railways, shipping and metals and mining sectors. Importantly, it gives the Congress new veto power to block any easing of those sanctions – thus undercutting the president’s power.

The President, Donald Trump has been enigmatic in blaming Russia for the cyber-attacks. He has said that other countries could have been part of this hack as well. Kremlin has repeatedly denied that it tried to interfere.

There is also an ongoing Department of Justice (DoJ) investigation looking into whether members of the Trump campaign colluded with Russia.

Analysis

Even though the bill was popular with US lawmakers, it has been a cause for concern in Europe. The EU had earlier issued a stern warning noting that these sanctions would be detrimental to businesses. However, after the bill was signed, European Commission President Jean-Claude Juncker said that he was satisfied with the efforts made by the Americans to soften the bill. The US Congress has also committed to applying the sanctions after consulting with nation’s allies.

Russia has retaliated to the sanctions by announcing that 755 US diplomats would have to leave the country by September 1, 2017. Russian Prime Minister Dmitry Medvedev took to Facebook to accuse the Trump administration of being “impotent.” He wrote, “The hope for improving our relations with the new US administration is now over. Trump's administration has demonstrated total impotence by surrendering its executive authority to Congress in the most humiliating way.” He also added that these sanctions amounted to a “full-scale trade war” between the nations. Russian President, Vladimir Putin has noted that he does not expect relations between the US and Russia to thaw in the near future.

Trump, for his part, also expressed his reluctance in having to the sign the bill. In a statement, he said that he only approved it for the “sake of national unity.” He added, “While I favor tough measures to punish and deter aggressive and destabilizing behavior by Iran, North Korea, and Russia, this legislation is significantly flawed.”

The bill was one of the first major pieces of legislation sent to his desk and it is one that seeks to undermine his Executive power.

Assessment

Our assessment is that the Russians consider the US sanctions as tantamount to declaration of full-scale trade war against Moscow. On the US side, it is a definite move by the Congress to limit the powers of the president. From a security perspective, it does not bode well for the US to upset Russia.