How Will Russia’s Economy Be Impacted By A Trump Win?

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Russian independent news outlet The Bell released the following:

There will be no immediate impact on the Russian economy from Trump’s election. To a large extent, Russian markets are shielded from international turbulence by Western sanctions, and minimal economic ties. However, Trump may have an indirect effect on Russia’s economy simply because of the huge rule the U.S. plays in the world.

Above all, Trump’s victory likely means a strong U.S. dollar. This is a consequence of higher interest rates in the U.S., and the risk of trade wars limiting growth in developing economies. Bloomberg economists calculated that, if Trump imposes a 60% tariff on goods from China, and a 20% tariff on other countries, then the U.S. dollar might strengthen 10%, reported Russian independent media outlet The Bell.

If U.S. import tariffs are increased, then this will accelerate global fragmentation and likely see other countries coalescing into trading blocs. It will mean a further deterioration of U.S. relations with China, and maybe even several rounds of tariff wars.

For Russia, this would mean slower economic growth. If all U.S. trading partners respond in kind to U.S. tariffs, by 2028 the overall damage to global GDP will be 0.5%, Bloomberg reported. If trading partners do not respond, the global economy will suffer less (but Chinese GDP growth would still be about 0.4% less). This all translates into lower demand for Russian exports, particularly crude oil, oil products and metals.

Trump’s policies might also hit Russian oil producers from another direction. Throughout his campaign Trump has called on producers to drill as much oil as possible – an approach that could end up increasing global supply, and depressing prices.

In addition, if we do see tariff wars, it will lead to a temporary spike in container shipping prices (as producers rush to move goods before the measures come into force). For Russia, this could mean an increase in import costs (on top of the effects of a stronger U.S. dollar).

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