The administration of U.S. President Donald Trump is reportedly preparing to lift sanctions on Russia that were imposed following its full-scale invasion of Ukraine, marking a significant reversal of U.S. policy toward Moscow.
According to a Reuters report on March 3, the White House is developing a plan to offer sanctions relief to certain Russian entities and individuals as part of negotiations aimed at ending the war. This move would represent a stark departure from the stringent sanctions imposed by former President Joe Biden, which were designed to cripple Russia’s economy.
While Europe and the G7 nations remain committed to maintaining economic pressure on Russian President Vladimir Putin, they may find themselves compelled to follow Washington’s lead to preserve unity among Ukraine’s allies and avoid economic isolation.
“The major revenue streams for Russia remain tied to business with Europe, and Europe could stand firm,” said Tom Keatinge, director of the Center for Finance and Security at the Royal United Services Institute (RUSI). “However, doing so risks marginalizing itself on the global stage.”
Although the effectiveness of sanctions is debated, they have clearly impacted Russia, particularly its oil and gas industry. Moscow has resorted to using a shadow fleet to sell discounted fuel while incurring higher export costs. Putin has repeatedly called for an end to sanctions, signaling their disruptive effect on Russia’s economy.
So far, Europe has not indicated whether it will maintain its sanctions. Kyiv’s sanctions commissioner, Vladyslav Vlasiuk, has urged European allies to uphold restrictions “for as long as necessary.” However, if the U.S. unilaterally lifts sanctions, it would be a major victory for Putin and a sign of growing divisions within the Western alliance, Keatinge told the Kyiv Independent.
Fallout
The purpose of sanctions has been to unify Ukraine’s allies in restricting Russia’s war economy and punishing Moscow for its aggression. The Trump administration previously floated the idea of sanctions relief to entice Moscow to the negotiating table, despite the extensive sanctions packages imposed by Biden and coordinated with London before Trump’s inauguration.
The widening rift between the U.S. and Europe increases the likelihood of Trump acting unilaterally. Elisabeth Braw, a senior fellow at the Atlantic Council’s Transatlantic Security Initiative, noted that Trump no longer prioritizes coordination with European allies and appears uninterested in maintaining sanctions.
“Imagine the chaos for companies if the G7 and the European Union had contradictory rules regarding Russia,” Braw said. The U.S. lifting sanctions unilaterally would create economic uncertainty, forcing companies to navigate conflicting regulations between Washington and its allies.
Historically, the U.S. and Russia have not been major trading partners, with pre-war trade totaling $6.4 billion in Russian imports and $29.7 billion in American exports in 2021. While lifting U.S. sanctions may not significantly impact Russia’s war economy, the political consequences would be severe, said Jason McCue, senior partner at McCue Jury & Partners LLP.
Disunity among Ukraine’s allies would not only benefit Russia but also undermine sanctions enforcement. The EU and G7 have already sanctioned “everything that is meaningful,” according to Braw, and their measures alone may not be enough without U.S. support. European countries would then face a dilemma: maintain sanctions to punish Putin or ease restrictions to prevent American companies from gaining an economic edge.
Pressure from businesses and pro-Russian leaders, such as Hungarian Prime Minister Viktor Orban, could further complicate Europe’s stance. Some European corporations may seek backdoor deals or licenses to remain competitive with U.S. firms, Keatinge warned.
If the EU lifts sanctions, the impact on Russia’s economy would be even greater than a U.S. reversal. Pre-war trade between Moscow and Brussels amounted to 257.5 billion euros in 2021, including over 60% of the EU’s fuel imports from Russia. The question remains whether Putin would allow European companies back into the Russian market. If the U.S. moves first, Putin could demand further concessions from Europe in exchange for renewed access to Russia’s economy.
“That would be a huge victory for Putin, as he would essentially be sidelining Europe while conducting business with the U.S.,” Keatinge said.
America First
Trump has the authority to lift some sanctions through executive action, while others would require congressional approval. His administration has already signaled interest in pursuing economic opportunities with Russia, particularly following a recent meeting with Russian Foreign Minister Sergey Lavrov.
Trump has expressed interest in Russia’s mineral resources, which were once a key component of its exports to the U.S. “If sanctions were lifted, the motivation would likely be financial—benefiting American businesses while giving Putin a political win and driving a wedge between the U.S. and the EU,” Keatinge explained.
Critics warn that lifting sanctions could allow Russia to rebuild its economy, strengthen its military, and resume its war efforts in Ukraine. “Without security guarantees for Ukraine, this would be an ill-fated strategy,” said Yuliya Ziskina, a senior legal fellow at Razom for Ukraine, a nonprofit advocacy group.
Sanctions relief would enable Russian businesses to re-enter global markets and access U.S. dollars, despite restrictions on dollar exchange trading on the Moscow Exchange, McCue noted. However, even if American companies were legally allowed to re-enter the Russian market, Russia’s unstable business environment, dominated by oligarchs close to Putin, remains a deterrent. Corporate raids and nationalization threats still loom over Western firms.
While some companies may cautiously re-engage with Russia, reputational risks and concerns about the country’s economic instability will deter many. “To be honest, the types of companies we’re talking about aren’t too concerned about reputational risks,” Keatinge concluded.
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