U.S. Commits to Decrease Russian Imports and Increase Tariffs

July 05, 2022

On June 27, 2022, following the G7 annual summit in Madrid, Spain, President Biden issued a statement affirming the United States commitment to levy tariffs on imports from Russia, impose sanctions on entities aiding Russia, and restrict Russian access to industrial inputs services and technologies. These measures will impact a substantial number of U.S. industrial sectors and businesses, and create additional considerations for U.S. companies navigating a complex maze of potential legal risks.

Washington, D.C. (July 5, 2022) - On June 27, 2022, following the G7 annual summit in Madrid, Spain, President Biden issued a statement affirming the United States commitment to levy tariffs on imports from Russia, impose sanctions on entities aiding Russia, and restrict Russian access to industrial inputs services and technologies. These measures will impact a substantial number of U.S. industrial sectors and businesses, and create additional considerations for U.S. companies navigating a complex maze of potential legal risks.

Levying Increased Tariffs

President Biden issued a Proclamation substantially increasing tariffs on U.S. imports of Russian products. The Proclamation, issued under the authority of the Suspending Normal Trade Relations with Russia and Belarus Act, which stripped Russia of its “most favored nation” status, will increase tariffs to 35% on about 570 categories of U.S. imports from Russia.

The tariffs affect a wide range of items and materials, including mineral products, chemicals, plastics, wood products, leather, paper, textiles, printed materials, footwear, headgear, stone, metals, vehicles, vessels, aircraft, cement, glass, electrical equipment, and machinery, among many others. Due to the breadth of affected imports, these tariffs are likely to affect numerous U.S. industries and businesses, which may have to consider changes in material sourcing. The increased tariffs will take effect 30 days after the proclamation, on August 1.

In addition, both President Biden and other G7 leaders claimed that they will seek to use revenues collected by these new tariffs on Russian goods to support Ukraine.

Additional Industrial and Individual Sanctions

As part of a combined international effort to restrict Russian access to military armaments and technology, the U.S. pledged to impose blocking sanctions on major state-owned defense enterprises, defense research organizations, and dozens of other defense-related entities affiliated with Russian defense supply chains. A subsequent June 28 press release from the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated 70 additional Russian entities involved in Russian aerospace and defense, as well as related exporters and management companies. OFAC designation places entities on the Entity List, which generally prohibits U.S. persons from entering into transactions or otherwise dealing with designated parties.

OFAC also announced that it sanctioned three individuals for evading sanctions by utilizing “foreign countries and bank accounts.” It is unclear if OFAC is also seeking to prosecute entities that “facilitated” or “caused” such unlawful conduct. Regardless, OFAC’s actions serve as a reminder of the legal risk associated with not conducting the proper due diligence to catch suspected sanction evaders. See Lewis Brisbois’ alert from April 13, “U.S. Sanctions on Russia Keep Coming, and the Legal Issues and Risks Keep Growing.

Other Restrictions on Russia’s Participation in the Global Market

Lewis Brisbois’ attorneys are advising clients on these increasingly complex and rapidly unfolding issues and are ready to assist in ensuring compliance with and management of the business and legal risks.

For more information, please contact the authors of this alert. Visit our Ukraine Conflict Response Practice page for more alerts in this area.

Authors:

Andrew Pidgirsky, Partner

Sean P. Shecter, Partner

Jane C. Luxton, Managing Partner - Washington, D.C.

Kimberly Ohanuka, Associate

George Leahy, Law Clerk