What to Look out for Today – US – Russian Trade Sanctions

Although Trump signing a bill imposing trade sanctions on Russia is yesterday’s news the blowback is new and potentially market effecting.

Russia’s second in command Prime Ministry Dmitry Medvedev, said that the signing of the bill basically equates to full out trade-war. Already the European market opening is expected to be lower because of these sanctions. To rub salt into the wound he added that this proved to be utter powerless. This has also been the general market consensus regarding the Trump administration – proving its political impotence when they recently attempted to reform Obamacare.

Much like the markets’ hope that the Trump administration would be able to reform the American market and manufacturing – the PM also mentioned that he had lost hope that their relationship with new U.S. administration would be improved compared to the previous. Of course much like the previous week’s quid pro quo – when Russia asked the U.S. to shrink their diplomatic staff by more than half and then seized a compound that was used by U.S. Embassy workers as a recreation home.

Both sides are walking a thin line though, neither Russia or the U.S. want to lose investments from each other – or create an irreparable political rift. Both of these scenarios cause unnecessary economic damage.

Another paradox that this has created is the EU’s resistance to the bill even though they were politically aligned with the U.S. upon the first enactment of sanctions in 2014 – as a reaction to Russia’s annexation of Crimea. The most significant point of the EU’s protest to the bill, is the fear that a new series of sanctions might have a parallel economic effect on the Union. European energy and oil companies working in Russia might have their activities impeded or even completely halted in retaliation.

This article comprises the personal view and opinion of the STO Investment Research Desk and at no time should be construed as Investment Advice.

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