What Lifting US Sanctions on Russia Could Mean

The US and its allies imposed thousands of sanctions on Russia following its invasion of Ukraine in an effort to slow down Moscow’s war machine. As President Donald Trump attempts to negotiate an end to the conflict, his administration has hinted at easing these restrictions while also threatening new measures. It remains uncertain whether Trump will tighten or loosen the sanctions. Trump stated he is ‘very angry’ with Russian President Vladimir Putin and warned that buyers of Russian oil could face secondary tariffs if Russia obstructs a peace agreement. However, he later softened his tone, saying he doesn’t believe Putin ‘will take back his word.’ If Trump chooses to reduce sanctions, he could lift nearly all American measures using executive authority. Yet, he doesn’t have entirely free rein, as approval from Congress is required to lift the most stringent American restrictions. To eliminate international sanctions, Trump would need to persuade European allies and others to dissolve their own packages. The possibility of easing sanctions serves as a negotiating tool for the Trump administration in discussions with Russia about ending the war in Ukraine. Beyond peace, US trade interests are also at play. Trump sees an economic opportunity in restoring relations between Russia and America—a strategy that was once unthinkable. Trump discussed significant economic growth trades with Putin during a February call, while the Kremlin mentioned talks about future economic and energy cooperation. The relaxation of sanctions could be more harmful to Russia than oil-related sanctions if April’s price drop persists due to Trump’s trade war and increased OPEC+ production. Regarding economic sanctions, Russia has been moving away from the dollar and euro for years in response to restrictions imposed after the annexation of Crimea in 2014. This shift accelerated following severe sanctions after the full-scale invasion of Ukraine. The US and its allies also attempted to pressure Moscow by freezing over $300 billion in Russian central bank assets, mainly in Europe. Russia has a fallback plan should these assets never be recovered; the increased value of its gold reserves could offset roughly one-third of the losses, according to Bloomberg calculations. Trump has the power to lift over 90% of American sanctions through an executive order. He could terminate national emergency declarations related to Russia’s aggression since 2014, which form the legal basis for many sanctions. For sanctions enacted under other presidential authorities, Trump could issue executive orders canceling measures individually or in groups. Alternatively, he could maintain sanctions but issue exemptions or licenses allowing businesses to operate with targeted entities. Biden’s January executive order before leaving office complicates unilateral removal of certain sanctions by Trump. The order reclassified some targeted Russian entities and subjected these sanctions to laws requiring Congress notification for any intent to repeal them. If Trump aims to revoke this category of sanctions, Congress communication would trigger a 30-day review period, during which the House and Senate could vote to block the lifting of restrictions. While Republicans control both chambers and are not eager to break with Trump’s agenda, many publicly support Ukraine. Some have participated in a bipartisan effort to impose more sanctions on Russia if Putin refuses good-faith negotiations or violates a potential agreement. Thus, Republicans might face a tough choice if asked to support sanction relief without a credible peace solution. A coordinated global effort ensured substantial overlap among US, UK, and EU sanctions. Ending sanctions depends heavily on international cooperation. If Trump withdraws the US from multilateral sanctions regimes, it would weaken but not eliminate them. For instance, SWIFT must comply with EU laws and sanctions. Lifting EU-imposed restrictions would require unanimous approval from all 27 member states. A coalition of European leaders ruled out easing sanctions against Russia during a summit in late March and suggested they might even increase pressure. The easing of sanctions could entice some Western companies and investors to seek opportunities in Russia, a market largely off-limits for over three years. Pre-war, foreign investors held around $150 billion in Russian stocks and government bonds, significant components of most emerging markets indices. Much of this money was withdrawn or trapped in Russian non-resident accounts. Investors would first look for access to these frozen funds if a peace agreement restores them. Most have written off these shares, so a revival could offer unexpected gains, especially given local stock prices and ruble appreciation since peace talks began. However, many investors may remain cautious due to how quickly the market became pariah in the past. There’s reputational risk in rushing to restore ties with a country responsible for Europe’s largest conflict since World War II, along with economic and legal risks if sanctions aren’t lifted or return later.