What Happens if Congress Codifies Russia Sanctions?

The EU phase-out following the invasion largely redirected Russian energy to China and India (Figure 1). Any use of a new tariff authority may amount to a decision about U.S. economic relations with these two countries. That cost is worth stating plainly. The authority bites hardest against the two economies Washington has the least appetite for a second front with, which is why the volume reduction carve-out should be read as an off-ramp for buyers rather than a loophole in the regime. The natural gas carve-out, meanwhile, shields European economies that have not yet completed the transition away from Russian energy from being swept into the tariff regime alongside its intended targets.

The tariff regime aims to restrict Russia’s war financing through two pathways: (1) incentivizing China and India to limit purchase volume of Russian energy to protect their exports to the United States, and (2) deepening the price discount that Russian energy faces in the global oil market.

Figure 2 provides a notional estimate of the discount on Russian crude oil exports to China as a benchmark against other oil suppliers to China. The initial implementation of sanctions and export controls against Russia after the full-scale invasion saw many of Russia’s trade partners begin to cut purchases and observe coalition price controls. The remaining buyers of Russian oil willing to risk secondary sanctions in turn had a stronger negotiating position in importing from Russia, allowing them to purchase this oil at discounted prices. The net effect was a decrease in revenue for the Russian war effort, regardless of changes in the volume of oil exported.

This mechanism is why the tariff authority is the most durable thing in the bill. A designation holds its value only as long as someone maintains it, adding the new fronts and entities that appear as networks adapt. A tariff schedule changes the option set facing every large buyer of Russian energy and keeps doing so for as long as it stands, weakening Moscow at the negotiating table in markets well beyond the ones Washington designates directly. While the exact impacts of a new tariff regime against purchasers of Russian oil will depend highly on implementation, new pressure on large purchasers of Russian energy will again find those willing to evade Western sanctions in a stronger negotiating position with Russian suppliers.

Notably, Russia sanctions are also timed with a relative price decrease for Chinese purchases of Iranian oil, and new pressure in the Russia sanctions effort may produce a similar negotiating advantage for buyers of Iranian crude.

The act additionally places greater pressure on the shadow fleet used to transport Russian energy. Curtailing the activities of the shadow fleet as a whole relies on implementing continuous designations against its constituent vessels. The United States has fallen behind its European allies in this effort. The act enables the White House to use as prima facie evidence that a vessel is subject to sanctions imposed by the United Kingdom, European Union, G7, or a member of the Five Eyes in new designations. This provision will enable rapid alignment on designations across jurisdictions and is a model for resolving the persistent coordination challenges that have emerged throughout this sanctions effort.

Locking in Stalled Economic Restrictions

The United States currently maintains roughly 6,800 Russia- and Ukraine-related sanctions designations, nearly all of which were implemented before January 2025. Since April 2022, it also maintains robust investment and financial restrictions against Russia for U.S. persons. The vast majority of these economic restrictions are imposed through executive orders put into place around the time of Russia’s full-scale invasion of Ukraine.

The act would codify existing restrictions into law and impose mandatory sanctions on Russia’s leadership, energy sector, financial institutions, and evasion networks within 30 days of enactment. It sends a signal to Moscow and markets that American resolve remains strong and will not decay with time. While that signal is important, Congress’s job will not end with passage. The act permits the president to waive any provision upon a written national interest certification. Without continued pressure on the executive branch, the practical policy change stemming from the legislation will be limited.

Sections 107 through 109 have drawn less attention than the tariff and shadow fleet provisions, and they may prove among the more consequential. They would make permanent the investment prohibitions that now rest on a 2022 executive order, with termination tied to a negotiated settlement or an explicit waiver. The practical effect is to remove a rapid, unilateral reopening of U.S. investment in Russia from the menu of available options. Any move toward normalization would have to be made on the record rather than executed by revoking an order. For European partners who have absorbed the costs of disengagement, that durability carries value independent of what the prohibitions do to Russian access to capital.

Figure 3 shows that U.S. designation activity flatlined in early 2025 as the administration pursued negotiations with Moscow. The United Kingdom and European Union continued designating through the same period. Sanctions lists degrade when they stop growing, as sanctioned actors adjust their operations and find new ways to conduct financial transactions. An 18-month pause thus erodes coverage of Russia’s evasion networks even without removals from the list.

Evasion Routes Are Reopening

Codification is necessary but not sufficient. Enforcement is where the executive branch’s inaction shows. The success of any sanctions program depends on the ability of the sanctioning party to stop circumvention. For the Russia sanctions program, this means restricting the transshipment of Western dual-use goods to Russia through third countries. Here, the record is mixed, and recent data suggests the problem is worsening again.

Kazakhstan offers a case study in how transshipment channels respond to sustained pressure. Following the invasion, Kazakhstan’s imports of a particular category of network and transmission equipment from sanctioning coalition countries surged far above prewar levels, with a corresponding surge in exports to Russia through late 2022. Coordinated pressure and coalition export controls in 2023 and 2024 suppressed Russia-bound flows, but more recent data shows the channel reopening as excess exports to Russia have climbed back to their 2022 peak. This trend in Figure 4 is indicative of a broader pattern—evasion networks adapt faster than static trade control tools.

The authority to designate dual-use transshipment networks already exists today under Executive Order 14024 and related export control tools. Whether channels such as Kazakhstan’s are closed remains a matter of executive implementation, and the recent pause in both sanctions and export controls is the reason to doubt that it will. The channel is reopening under authorities that were never withdrawn, which locates the gap precisely: not in what the executive may do, but in what it has chosen to do. No provision of the act changes that, and no provision likely could.

Recommendations

Congress cannot compel ongoing designation activity without continuous legislation, and the waiver provision means it cannot compel much else. It can compel an explanation. A specific, recurring, on-the-record account of economic pressure policy is the mechanism that makes discretion visible, and visible discretion is harder to exercise quietly. Congress should pursue three specific actions:

• Mandate circumvention designation implementation and enforcement reporting to Congress. Continued progress in restricting Russian transshipment networks should be mandated in quarterly reporting to Congress. These reports should cover the additional sanctions and export control actions used to limit these networks, outline the analytical practices being used to identify them, and highlight the actors and jurisdictions driving circumvention for diplomatic outreach.
• Expand required criteria in waiver certifications. A national interest certification should identify the provision waived, the entities or jurisdictions spared, the expected duration, and an impact assessment explicitly tied to circumvention risks. Waiver authority is a reasonable executive prerogative. Exercising it without a public account of what it covers converts a codified sanctions program back into a discretionary one.
• Benchmark U.S. designation activity against coalition partners. Reporting should assess new U.S. designations against UK and EU activity over the same period. Divergences between the United States, United Kingdom, and European Union will continue to produce opportunities for circumvention and should be minimized. If coordination issues persist, Congress should consider expanding its prima facie approach for vessel designation to more subjects.
   

Conclusion

The Sanctioning Russia and Iran Act of 2026 comes at a pivotal moment in the Ukraine war and would mark the most significant congressional intervention in Russia sanctions policy since the Countering America's Adversaries Through Sanctions Act (CAATSA) in 2017. Codification would harden roughly 6,800 designations and standing investment restrictions against reversal, and the tariff authority would provide a credible instrument against the Chinese and Indian purchases now funding Moscow’s war effort. But the White House already possesses many of the options provisioned by the act, and its waiver provisions mean that statute alone will not guarantee strong implementation and enforcement.

That is an argument for congressional attention after passage, not for discounting the legislation. The act restores Congress to a policy area it has largely ceded since 2017, and it does so at a moment when Russia can least afford new pressure on its export earnings. Whether that standing amounts to anything will depend on whether Congress uses it to demand a regular accounting of how its own law is being enforced.

Philip Luck is director of the Economics Program and Scholl Chair in International Business at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Brad Spicher is a research intern with the Economics Program and Scholl Chair in International Business at CSIS.