Potential Implications of the Latest Sanctions

Editors’ Note: MarketMinder is politically agnostic. We prefer no party nor any politician and assess developments for their potential economic and market implications only.

A new bipartisan bill floating around Congress—co-authored by the late Senator Lindsey Graham—grabbed lots of eyeballs last week. The “Sanctioning Russia Act of 2026” seeks to harden and broaden US economic pressure on Moscow and its allies. For some pundits, this is rekindling fears of the dollar losing its reserve currency status. We think that remains a false fear—but that doesn’t mean the bill has zero potential market-related issues worth considering. Namely, if it passes as written, it would hand US presidents further unilateral tariff authority—potentially sowing future uncertainty.

Let us start with a quick primer on the bill, which aims to combat Russia’s ability to finance its war in Ukraine by filling gaps and loopholes in existing sanctions. First, it makes existing sanctions—which rely heavily on executive discretion about whom to target, when and how strongly—mandatory, codifying them into law. Today’s economic sanctions on Russian political and military officials, oligarchs, banks, energy companies and sovereign debt would become automatic, “no choice” requirements rather than White House policy choices.

Secondly, and more importantly in our opinion, it would grant presidents unilateral authority to apply tariffs of up to 100% on the top five purchasers of Russian oil and natural gas. While Russian export data are scant, this would likely include China, India, Turkey, the EU and Japan.^[i] Countries attempting to evade these sanctions (i.e., via shadow fleet) would also be potential tariff targets.

Like many legislative proposals, it sparks investor fear for the wrong reasons. Pundits call it bad news for the US dollar’s global reserve currency status, suggesting it could incentivize Russia and its allies to re-route ever-more trade and finance through non-dollar channels—sapping foreign demand for the greenback. Yet as we have shown, these fears are false—US assets are still in demand, it would take a loooooooong time for the dollar to lose its throne, and that role doesn’t confer the US much tangible benefit anyway. Consider: Freezing and seizing Russia’s dollar-based assets in 2022 was already a massive incentive for countries fearing they might one day be sanctions targets to switch from ye olde greenback. Yet per the IMF, the US dollar’s share of allocated foreign exchange reserves has barely budged since then. If change is coming, it is moving glacially.

More important is the tariff powers, which add to an existing, well-worn problem markets are dealing with. For several decades, Congress has increasingly delegated tariff authority to US presidents through trade and emergency laws. Today, presidents are authorized to impose broad tariffs under several legal statutes, like 1962’s Trade Expansion Act, 1930’s Tariff Act and 1974’s Trade Act. Yes, such powers aren’t unlimited. The US Supreme Court’s February ruling proved this.

But the Commander-in-Chief still has substantial tariff power, as President Donald Trump’s new replacement tariffs Friday illustrate. And as a Wall Street Journal op-ed noted last week, the bill’s passing as written would mean Congress granting Trump—and future presidents—more unilateral authority to impose sweeping tariffs whether or not the actual motivation relates to the war. Not only on Russia or China, but the EU and India (and potentially others).^[ii] The bill’s explicit language could make court challenges tough sledding. Section 117 offers sanction targets an off ramp, though, by allowing the president to waive any sanctions, restrictions or tariff duties if the president provides a justification (i.e., verifiable de‑escalation by Russia, or critical allied interests) and certifies to Congress that doing so is in America’s national interest.^[iii]

Now, we don’t think this threatens the bull market in the here-and-now. Tariff news has lost much of its market influence and, again, Trump’s use of them is well understood. But, regardless of your view on the specific tariffs enacted in the last year, Congress’s ceding more authority to presidents ushers in more political uncertainty, a headwind for business investment—a critical economic swing factor.

Tariffs always inject uncertainty, adding costs for consumers and businesses. They can destabilize trade by distorting demand and supply. Many say tariffs will foster greater domestic activity to replace the trade affected by activity elsewhere, but there is a problem with this thinking, especially when the tariffs are enacted by fiat. Will businesses invest solely because of a trade barrier that can be erased by the swoop of a pen now or by a future president? This is the story of steel in America since the 1970s, to a great extent. Many think the industry lacked tariff protection, but this is wrong. There was a web of them implemented by several presidents that would expire, lift or get extended or replaced. All random. Thus, US steel makers delayed and forestalled investing in modern production. Why do that when they need a long runway to recoup costs and tariffs’ “protections” aren’t guaranteed to last? It isn’t just tariffs’ haphazard implementation that is negative and injects uncertainty. Their existence can, too. Uncertainty can mean less investment. It can also mean industries, perhaps energy under this bill, don’t act as swiftly on price signals.

Over the past year, there has been much handwringing by Senators and Congresspeople of both parties over tariffs. Ironically, Congress could have reclaimed a lot of this power last year by passing bills like the Trade Review of 2025 (which would have forced any new presidential tariffs to be notified to Congress within 48 hours and to expire automatically after about 60 days unless Congress passed a joint resolution approving them) or other bipartisan proposals aimed at repealing or narrowing presidents’ global tariff authorities. But despite Congress’s noisy complaints, these bills hit roadblocks as House and Senate leaders blocked them on mostly political grounds.

Now some in Congress are considering ceding even more of their authority to 1600 Pennsylvania Avenue. Today, headlines view this near-exclusively through a Trump lens, which is understandable. Tariffs have been a cornerstone of his political agenda. But what about the next administration and beyond? Assuming Russia is still a global pariah (which seems pretty likely, frankly), the bill as written would let any US president unilaterally wield or undo tariffs of up to 100%. It could usher in a new era of uncertainty for businesses, a potential long-term headwind for growth. Consider, too, the possibility this bill becomes the blueprint for future sanctions packages against other states deemed pariahs, further widening the tariff scope.

For now, this is all in the realm of possible, not probable, and markets move most on probabilities. The House failed to pass the bill before summer recess began, and Democratic Senators who oppose the tariff power transfer are pursuing procedural opposition. Graham’s compromise already included watering down the tariff rate from 500% to 100%. Perhaps Senate negotiations mitigate this further. So while this is a potential long-term risk to weigh, for now, it is just that.