Last week, the Trump administration announced that it will impose new tariffs on Russia starting around August 22. Russia's currency fell to its lowest dollar value in almost two years at the news. These sanctions are in response to a nerve-agent attack on a former Russian spy in the U.K. In March, British officials declared that Russia was to blame for the poisoning of Sergei V. Skripal, a former Russian intelligence officer once imprisoned for selling secrets to the British, and his daughter Yulia. They were both exposed to a rare nerve agent that belonged to a class of Soviet-developed chemical weapons known as Novichok. Both targets survived, but a woman inadvertently exposed to the chemical died.
In a statement, the White House said they were acting in compliance with the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991, which mandates that once a government uses chemical or biological weapons in violation of international law, sanctions must be imposed. Before the sanctions, it cost 62.5 rubles to purchase a dollar; now it costs 66.5. Moscow officials expressed their dismay at these restrictions, particularly since only last month Trump and Putin had a friendly summit meeting. Dmitry S. Peskov, the Kremlin spokesman, commented, "Such decisions made by the American side are absolutely unfriendly, and you cannot associate them with the constructive, even if difficult, atmosphere we had during the last meeting of the two presidents."
The restrictions cover any exports to Russia that could have a potential national security purpose: gas turbine engines, electronics, and testing and calibration equipment. The US is also looking to contain the Russian energy sector, which the country heavily relies on. Some companies were hit harder than others. Shares in Aeroflot, Russia's national airline, fell 11.4 %. Washington officials stated that flights between the US and Russia could actually be banned. Russia also has few economic means to retaliate. Sergey Ryabukhin, a member of the Parliament, suggested banning sales of Russian rocket engines, but the US has other options.
On August 1, Russia started imposing extra import tariffs of 25-40% on a range of US goods, including road construction, oil and gas, and metal processing machinery. Russian Prime Minister Dmitry Medvedev stated, "All I can say is: if they ban banking operations or the use of any currency we will call it the declaration of an economic war. And we'll have to respond to it - economically, politically or in any other way, if need be. Our American friends should make no mistake about it."
Although Russia has $428 billion in gold and hard currency reserves to strengthen the ruble, the central bank has not used it yet, allowing the value to drop. This has helped domestic industry and agriculture. Peskov said that Russia's financial system is still fairly stable and strong despite some difficult times.