Economy 11 March 2022, 11:35am

G7 countries to deliver another heavy blow to Russian economy

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The leaders of the seven most advanced industrialised countries (G7) are taking steps to impose tariffs and quotas on Russian imports to put further pressure on the Russian economy rapidly spiralling into recession. US President Joe Biden is expected to make an announcement to this end as early as 15:15 GMT this afternoon, Reuters has learned from multiple sources. The move effectively points towards a tariff war, as the Russians are not expected to let the decisions go unchallenged.

The United States, together with the Group of Seven nations and the European Union, will move on Friday to revoke Russia's "most favored nation" status over its invasion of Ukraine, multiple people familiar with the situation told Reuters.

Stripping Russia of its favored nation status paves the way for the United States and its allies to impose tariffs on a wide range of Russian goods, which would further ratchet up pressure on an economy that is already heading into a "deep recession."

Each G7 country (the United States, Canada, Japan, the United Kingdom, Germany, France, and Italy) must implement the change in Russia's trading status based on its own national processes, two of the people said. This implies a longer process rather than an immediate change.

In the United States, removing Russia's "Permanent Normal Trade Relations" (PNTR) status will require an act of Congress, but lawmakers in both houses - and on both sides of the political aisle - have already signalled their support, two officials said.

Unprecedented, sweeping sanctions slapped on Russia's banks and elites, along with export controls on a raft of technologies, have already caused the Russian economy to crater, and the International Monetary Fund is now predicting that it will plunge into a "deep recession" this year.

Reuters reminded that in 2019, Russia was the 26th largest goods trading partner of the United States, with some $28 billion exchanged between the two countries, according to the U.S. Trade Representative's office.

Top imports from Russia included mineral fuels, precious metal and stone, iron and steel, fertilizers and inorganic chemicals, all goods that could face higher tariffs once Congress acts to revoke Russia's favored nation trade status.

Biden on Tuesday had imposed an immediate ban on Russian oil and energy imports.

Some U.S. governors have already ordered government-run liquor stores to stop selling Russian-made vodka and distilled spirits in solidarity with the Ukrainian people.