Sanctions expectations in a second Trump administration
Former Treasury Secretary Steven Mnuchin once commented that he spent “half his time on sanctions.” Sanctions served as a key tool in the first Trump administration’s foreign policy strategy, which fixated on a maximum economic pressure campaign against Iran. It is reasonable to expect that sanctions will play a prominent role in Trump’s foreign policy agenda in his second term, given that the people likely to join the second Trump administration’s Treasury and State Department sanctions teams will have previously served under Trump. The architect of the “maximum economic pressure” campaign against Iran is leading State Department transition efforts. Senator Marco Rubio, considered to be a proponent of sanctions and a hawk on Iran and China, has been nominated to be Secretary of State, indicating the directional sanctions-heavy focus of the new administration.
There is concern globally about what a second Trump administration will mean for Russia-related sanctions, particularly if they’ll be quickly lifted as part of a deal to end the crisis in Ukraine. Sanctions against Russia to date have been a true multilateral effort, with dozens of nations subscribing to the program and heavy coordination among Group of Seven (G7) partners and European Union teams. While President-elect Trump has not made any specific statements about the use of sanctions on Russia, he may yet act to change them. Considering that possibility, it is important to note that the president is not the sole decider.
Any next steps in an expansion or potential reduction of sanctions against Russia will largely be directed by whoever is appointed in key roles on the National Security Council and at the Treasury and State Department, as well as the US Congress. In an extraordinary bipartisan effort in 2017, during Trump’s first administration, the Countering America’s Adversaries Through Sanctions Act (CAATSA) was enacted in part to limit the president’s ability to unilaterally lift sanctions on countries such as Russia. CAATSA requires the president to submit a report to appropriate congressional committees and leadership prior to lifting Russia sanctions. This however doesn’t extend to Biden-era sanctions after the second invasion of Ukraine in 2022. While G7 partners’ concerns about the potential for the United States to lift its sanctions targeting Russia are valid, there are several procedural hoops the next administration would need to jump through to do it in order to fully lift all existing sanctions.
If the next administration decides to expand sanctions on Russia, there is one tool that was employed in a limited form in Trump’s first administration that could be considered: secondary sanctions. Secondary sanctions force countries to choose between doing business with those imposing sanctions or those that are the subject of sanctions. President Obama’s administration leveraged secondary sanctions to bring Iran to the negotiating table to form the Joint Comprehensive Plan of Action (JCPOA) in 2015, a deal that Trump ultimately abandoned in 2018. Secondary sanctions related to Russia were imposed by President Biden in December 2023 and have slowly begun to be implemented. It’s conceivable that this instrument of foreign policy could be used as another stick in a Trump 2.0 strategy to compel unaligned countries, including current US allies, to align with American objectives regarding Russia or other national security priorities, such as China.
However, relations with China are not as tense as they were when Trump left office nearly four years ago. The Biden administration sought a reset of US-China relations after tensions reached a peak during the spy balloon incident in 2023, and has largely followed the path of export control and sanctions policy that started during the Trump administration. It notably eased, but did not pull down the Trump-era tariffs targeting China’s unfair trade practices. The Economic Working Group was formed between the United States and China in October 2023 to serve as an ongoing channel to discuss bilateral economic policy matters including climate change, capital requirements, and fentanyl trafficking. While there continues to be a tit for tat on trade and export control matters, it is on a less prominent scale than the first Trump administration.
Given President-elect Trump’s rhetoric on the campaign trail about the importance of building relationships with your adversaries, it is still an open question of whether he will resume his tactics of trade and tariff threats against China once in office. The landscape with China has changed since Trump left the White House, including through China imposing the Anti-Foreign Sanctions Law in 2021. The law forbids compliance with foreign sanctions in China, complicating the ability of any US business to fully comply with both Chinese and US regulations. It is conceivable that, between the Anti-Foreign Sanctions Law requirements and export control bans China has put in place for rare earth minerals and precious metals, Trump 2.0 takes a more diplomatic approach toward China lest he more broadly disrupt global supply chains.
Daniel Tannebaum is a non-resident senior fellow with the Economic Statecraft Initiative at the Atlantic Council and partner in Oliver Wyman’s Finance & Risk Practice, where he leads the firm’s Global Anti-Financial Crime Practice.
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Economic Statecraft Initiative
Housed within the GeoEconomics Center, the Economic Statecraft Initiative (ESI) publishes leading-edge research and analysis on sanctions and the use of economic power to achieve foreign policy objectives and protect national security interests.
Image: Norcross, GA, USA - October 10, 2015: Presidential candidate and Republican party nominee Donald Trump giving a speech at a rally in Georgia
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