The U.S. Administration Changes Its Strategy in Trade Wars, Shifting from Sanctions to Tariffs

According to the IMF, in 2025 the total volume of international reserves worldwide exceeded $13 trillion, while the share of the U.S. currency in them fell last year to a record-low level of 56.77% compared with 58.52% in 2024. The figure was the lowest in the entire history of IMF data reporting since 1995.

This is largely due to the tough protectionist trade policy of the U.S. administration, in which sanctions have the most destructive effect in fueling growing distrust of the dollar. Sanctions risks prompt more and more countries to limit its use in cross-border settlements and, accordingly, in international reserves. A study by the U.S. National Bureau of Economic Research (NBER) notes that in Russia, Belarus, Kyrgyzstan, and Myanmar, which have faced U.S. sanctions, banks are switching en masse to the yuan.

The negative impact of U.S. administrative sanctions measures on the dollar’s position in international circulation caused sharp disagreements at the Senate discussion held on July 24 regarding a bill on sanctions against Russia. Even at the stage of preliminary discussions with lawmakers, the White House insisted that the president retain the authority to suspend sanctions or even not introduce them in order to be able to conduct constructive negotiations with sanctioned countries and not provoke them into using international settlement instruments alternative to the dollar.

In order to support the dollar’s international position, dollar-denominated credit lines are being developed with as many countries as possible to stimulate the use of the U.S. currency. In June, the U.S. Department of the Treasury opened an “appeals portal” to simplify submitting requests to remove legal entities from sanctions lists.

As an additional instrument of pressure on trading partners alongside sanctions, the Trump administration is increasingly actively using import tariffs, regardless of the degree of those countries’ loyalty to the United States. The targeted purpose of import tariffs is to reduce the trade balance deficit and thereby support the dollar, as well as to support domestic production by curbing cheap imports and stimulating U.S. exports. A notice published in the U.S. Federal Register (FR) on July 23, which entered into force on July 24, contains a list of 60 countries on which import tariffs of 10% to 12.5% are imposed. The pretext was the results of an investigation into these countries’ use of forced labor in supply chains, which runs counter to Section 301 of the U.S. Trade Act of 1974.

In particular, tariffs on goods from EU countries and Taiwan amount under the new regulation to up to 10%, while products from Japan, Switzerland, and South Korea are subject to tariffs of 12.5%. For goods from dozens of other countries, a rate of 12.5% plus additional fees applies. The use of import tariffs is becoming a permanent instrument of U.S. trade protectionism policy. The introduction by the Trump administration of a new protectionist tariff regime coincided in time with the U.S. Supreme Court’s отменой of previous customs duties.

Author: Professor, Doctor of Economics, Professor of the Department of World Economy and World Finance at the Financial University under the Government of the Russian Federation Viktor Yakovlevich Pishchik.