BREAKINGVIEWS-Russia’s tariff dodge is still a loss for Putin

By Pierre Briancon

BERLIN, April 23 (Reuters Breakingviews) - Russia has been spared the direct tariff punishment that U.S. President Donald Trump has inflicted on the rest of the world, but Vladimir Putin has no reason to cheer. The Russian president will soon find out that his country’s economy will be hit, as others, by the consequences of a global trade war. The falling price of oil is shrinking Moscow’s main export revenue, further straining its stretched war economy.

Trump spared Russia when he announced his so-called reciprocal tariffs on April 2. Trade between the two countries has shrunk since economic sanctions hit Moscow. The U.S. had a $2.5 billion goods deficit with Russia last year, equivalent to 80% of its imports. Under the bizarre formula the White House used to calculate its levies, that would have called for a tariff of 40%.

According to an International Monetary Fund estimate based on the economic impact of the measures Trump imposed during his first presidency, 1% worth of tariffs can trigger a fall of imports of 0.8%. By that yardstick, Russia’s economy might have lost $1 billion in export revenue if Trump had included it on his list.

That amount, however, pales in comparison with the real harm that will now be inflicted on the Russian economy. Oil and gas prices have fallen on fears that U.S. policies will trigger a global slowdown. Urals crude, the Russian variety, has tanked by a quarter since its January high, to around $60 a barrel in recent days. Energy accounts for more than a third of the Russian government’s income. Moscow had based its 2025 budget on an estimated price of almost $70 a barrel.

The difference between that level and $60 a barrel implies that the Kremlin could be short of almost $16 billion in oil tax revenue this year compared with its plans, according to Breakingviews calculations. A near-30% slide in the dollar versus the rouble since the start of 2025 also hurts, by shrinking the government’s oil revenue in rouble terms.

The tariff dispute will have another indirect impact on Russia, which has become more dependent on China after Western sanctions. The People’s Republic could find that its northern neighbour is a convenient market for dumping goods that are tougher to sell in the United States. That may help ease Russian inflation, but it could also hurt the local businesses Putin seeks to promote after Western investors deserted the country.

Putin and his associates rejoiced in recent weeks about Trump’s tariffs and the punishment inflicted on Europe. They may soon row back on the schadenfreude.

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CONTEXT NEWS

The price of Urals crude oil, a benchmark for Russian-produced oil, was hovering around $61 per barrel on April 23, compared with almost $80 in mid-January.