Congress recently passed new sanctions on Russia, Iran, and North Korea, and Trump is expected to sign the legislation. The Russia sanctions are prompting threats of retaliation from the EU on account of the effect some of the sanctions could have on European businesses:
New sanctions against Russia proposed by U.S. lawmakers and which could harm European firms violate international law and the European Commission should consider counter-measures, the German economy minister was quoted on Monday as saying.
“We consider this as being against international law, plain and simple,” Brigitte Zypries told the Funke Mediengruppe newspaper chain. “Of course we don’t want a trade war. But it is important the European Commission now looks into countermeasures.”
This is one of the obvious pitfalls of these sanctions, since they punish firms in allied countries that do business with the targeted country. The French government has likewise objected to the new sanctions on Russia and Iran on the grounds that they violate international law. This has brought the U.S. into conflict with the affected allies, who understandably resent having their companies punished for the behavior of another government and reasonably object to being dictated to by Washington. Sanctions usually fail to change the behavior of the targeted government, but beyond that they can have additional costs for the U.S. that are rarely considered. Those costs include doing damage to the economies of allied states, which in turn harm our relations with those states and may prompt retaliation against U.S. businesses. I doubt that members of Congress gave any thought to this when they overwhelmingly passed the latest sanctions bill, but it should give them pause that a measure that they passed with near-unanimous support is already backfiring.