Yellen Says Recent Russia Sanctions EO Is Working

A December executive order that gave the U.S. broader authority to sanction financial institutions involved in shipping goods to Russia has had a “meaningful impact” on Russia’s military industrial supply chains so far, Treasury Secretary Janet Yellen said this week.

Yellen, speaking during a press conference before the meetings with the Group of 7 finance ministers in Italy this week, pointed to the fact that Russian President Vladamir Putin’s spokesperson has “acknowledged new difficulties” in obtaining key industrial goods. She also said the U.S. has been pushing businesses and financial institutions around the world -- specifically mentioning China -- to stop supplying Russia's military-industrial base, including through shipments of optics and semiconductors.

“We will continue our efforts to make sure financial institutions are aware of the increased risks of sanctions since President Biden’s December Executive Order, which I believe has had a meaningful impact in disrupting Russian military-industrial supply chains,” Yellen said.

Lawyers have said the December order raised compliance risks for foreign banks that may have thought they weren’t subject to U.S. sanctions authorities (see 2401120051 and 2312220023).

Yellen also spoke about China’s “industrial overcapacity” and other unfair trade practices, which are leading to “large volumes of exports” from China at “depressed prices.” Yellen mentioned that the U.S. announced new tariffs on Chinese goods earlier this month (see 2405220072), and she said the G7 ministers plan to discuss this week how they can also respond to China.

“The EU and other countries are already using their authorities to investigate and consider remedies to China’s actions with regard to electric vehicles, and many emerging market countries have launched antidumping investigations in a range of sectors,” Yellen said.

“This week will be a key opportunity to discuss how China’s macroeconomic imbalances and industrial overcapacity can affect our economies.”