Photo: A customer pays with Russian ruble banknotes at a market in Saint Petersburg, Russia July 9, 2023. Credit: REUTERS/Anton Vaganov

Russia — Zero Tariffs Bring Zero Relief

Russia was spared tariffs by the Trump administration but the impact of a protracted global trade war will be significant.

By Alexander Kolyandr

April 8, 2025

At first glance, Russia seems to be a mere observer in an unfolding global trade war. In reality however, US tariffs look set to cause indirect problems in the coming months through reduced revenue from raw materials, higher interest rates for longer periods, and a rising dependence on China.

The White House said Russia was not hit with tariffs because there was no trade between the two countries due to the Western sanctions imposed as a result of the full-scale invasion of Ukraine.

That’s not entirely true. In 2024, exports of Russian goods to the US totaled $3.27bn (the lowest in more than 30 years), and the US exported $526m worth of goods to Russia. These are tiny numbers when it comes to overall US trade, but, for example, Lesotho, an African kingdom with a population of 2 million, sells even less to the US — about $2bn worth of goods a year — but was hit with a 50% tariff.

According to the formula used to determine the tariffs on trading partners, Russia should have faced a 40% tariff (based on 2024 numbers). That said, in the last pre-war year of 2021, the two countries enjoyed almost equal trade – which would have meant Russia being included within the lowest, 10% rate.

It’s possible that Russia’s absence from the list could be a deliberate US move to gain leverage over President Vladimir Putin in the ongoing Ukraine peace talks between the two countries. However, the trade volumes are so insignificant that they are unlikely to influence the Kremlin, particularly while sanctions remain in force.

Yet, the small volume of US-Russia trade did not stop Russia’s stock market from falling in line with its counterparts in other countries following the tariff announcement on April 2, although the Moscow Exchange’s drop of 8% between then and April 6 was relatively modest.

But even if Russia is not a target of the trade wars, it’s certain to suffer collateral damage.

Oil prices are the main risk. The outbreak of full-blown trading hostilities would slow global growth, especially in China and other Asian countries. Low growth would lead to a fall in the price of oil, Russia’s main export. On April 6, prices for Brent crude fell below $63 per barrel, the lowest level since April 2021. Goldman Sachs lowered its outlook for 2026 to $58. The price for Urals, the Russian benchmark oil, was traded at $53 per barrel, compared to $60 on which the 2025 budget is calculated.

Get the Latest

With the oil price lower than expected and the ruble stronger than expected, Russia’s revenues are below where they should be for this year. And if oil prices fall yet further amid expectations of a global economic slowdown, the Kremlin might be obliged to borrow more money to cover the widening fiscal deficit. In the middle of a trade war, this won’t be cheap.

A fall in revenue from energy exports could also make it harder for Russia’s Central Bank to cut interest rates. Higher rates mean that the cost of borrowing would rise, putting a brake on economic growth (which is already expected to slow this year).

In addition, a global trade war weakens the position of Russian oil and gas on world markets, according to Alexander Isakov of Bloomberg Economics. It reduces the likelihood of Russia being able to increase exports to the European Union (EU) and makes it more likely that Asian buyers will seek to pay even less.

That’s partly because the EU, China and other countries will want to reduce their trade imbalances with the US, and one way to do this is to increase imports of American oil and LNG from the US (resulting in fewer imports from Russia).

At the same time, Russia will become increasingly dependent on China, which is facing a fall in the volume of its exports to the US and a devaluation of the yuan. The former requires it to increase exports to other markets (like Russia), and the latter makes this more tempting.

So while some have interpreted US trade policy as less hostile to Russia than to other countries, the truth is that intentions hardly matter. The global turmoil caused by the tariff policy threatens serious consequences for a Russian economy already suffering acute strains from its war against Ukraine.

Alexander Kolyandr is a Non-Resident Senior Fellow at the Center for European Policy Analysis (CEPA) specializing in the Russian economy and politics. Previously, he was a journalist for the Wall Street Journal and a banker for Credit Suisse. He was born in Kharkiv, Ukraine, and lives in London. 

More on this and other aspects of the Russian economy in a weekly summary produced by an independent publication, The Bell.

Europe’s Edge is CEPA’s online journal covering critical topics on the foreign policy docket across Europe and North America. All opinions expressed on Europe’s Edge are those of the author alone and may not represent those of the institutions they represent or the Center for European Policy Analysis. CEPA maintains a strict intellectual independence policy across all its projects and publications.