When US President Donald Trump signed the latest batch of sanctions against Russia into law, Russian Prime Minister Dmitry Medvedev called the move equivalent to a ‘full-scale trade war’. Medvedev further explained how the US has shown its ‘utter powerlessness’ by doing so. The new round of US sanctions has basically served to extinguish any remaining hopes the Kremlin may have had that relations between Washington and Moscow would somehow improve under President Trump. However, upon closer examination, Medvedev’s comments that both countries are now in a ‘full-scale trade war’ do not appear to hold.
Source: UN Comtrade.
Russian exports to the US have already been in a steadfast decline since 2011. Notably, Russian oil exports have witnessed a virtual freefall. Not sanctions, but rather the US shale revolution is the main reason for this decline. The massive increase in domestic oil production in the US has made America far less dependent on oil imports. For Russia this has meant far fewer exports find their way to Uncle Sam.
* Includes crude oil, shale oil, oil sands and NGLs (natural gas liquids – the liquid content of natural gas). Source: BP Statistical Review of World Energy June 2017.
From the US side, exports to Russia have been in a clear decline since mid 2013. Importantly, it should be emphasized that this decline set in from an already significantly lower base than did Russia’s exports to America.
Source: UN Comtrade.
In reality therefore, it is the Russian economy that has already suffered a much greater loss in trade with the US than the other way around. And more importantly, this decline in trade set in well before the West imposed sanctions over Russia’s annexation of Crimea and its meddling in eastern Ukraine.
For a trade war to erupt, one has to have significant trade to begin with. At the moment, this simply is not the case. Prime Minister Medvedev’s comments should therefore be read as primarily geared towards a domestic audience and as part of the larger disinformation campaign waged by the Kremlin in its standoff with the West.
Experts
Related Content
