Overview
The Sanctions Update is compiled by Steptoe’s International Trade and Regulatory Compliance team and Steptoe’s Strategic Risk team. You can subscribe to receive the Sanctions Update every week through Steptoe’s International Compliance Blog and Stepwise Risk Outlook publication home pages.
For more information or advice on any of the developments discussed below, please contact a member of our sanctions team here.
US Developments
Trump Tells Putin to “Make a Deal” on Ukraine or Risk Sanctions and Tariffs
Since returning to office, President Trump has struck a more critical tone toward Russia than in first term or during his campaign. On Inauguration Day, President Trump said that Russian President Vladimir Putin was "destroying Russia" by waging war in Ukraine. Two days later, in a post on Truth Social, President Trump called on Putin to “settle now” and “make a deal” to end the war in Ukraine, or else he would “have no other choice but to put high levels of [t]axes, [t]ariffs, and [s]anctions on anything being sold by Russia to the United States, and various other participating countries.” President Trump's comments follow recent speculation that the Trump administration was crafting a “wide ranging” sanctions strategy that would tighten sanctions on Russia if President Putin refused to negotiate a cease fire.
Trump campaigned, in part, on bringing an end to the war in Ukraine. However, he had not provided details on his policy strategy to end the war. Given President Trump’s statements last week, it appears that he is now considering imposing more sanctions on Russia to bring Putin to the negotiating table, rather than offering sanctions relief at the outset. However, the precise timing and trigger for the Trump administration to follow through with stricter sanctions on Russia remain unclear, and sanctions relief for Russian officials, industry, financial institutions and others is still expected to be a core component of any peace negotiations.
Notably, Trump’s Truth Social post also suggested the possibility of coordination with other countries in sanctions and tariffs against Russia. While many observers have expected the Trump administration to break from Europe on Russia policy, Trump’s post suggests that he may, in keeping with the Biden administration’s approach, ask US allies in Europe to adopt more stringent measures against Russia in concert with the United States.
President Trump Threatens Sanctions in Dispute with Colombia
President Trump threatened Colombia with “fully imposed” “IEEPA Treasury, Banking and Financial Sanctions,” visa restrictions on Colombian government officials, and significant tariffs in a short-lived dispute with Colombian President Gustavo Petro over Colombia’s refusal to accept two deportation flights operated by the United States military. After a brief back-and-forth on social media between President Trump and President Petro, the Trump Administration announced that Colombia had agreed to accept the flights and that the sanctions and tariffs would be “held in reserve” as a result.
President Trump’s decision to potentially use sanctions as a tool for his immigration policy is another instance in which President Trump has linked immigration directly to national security early in his second term. In addition, although President Trump had made some statements while on the campaign trail indicating that he disfavors using sanctions, this dispute suggests that the Trump Administration may be open to using sanctions as policy tool in new, uncharted ways.
Trump Moves to Label Cartels as Terrorists
President Trump recently signed an Executive Order (EO) to create a process by which certain organizations, including cartels, may be designated as Foreign Terrorist Organizations (FTOs), Specially Designated Global Terrorists (SDGTs), or both. The EO, “Designating Cartels and Other Organizations as Foreign Terrorist Organizations and Specially Designated Global Terrorists,” is emblematic of the growing popularity of sanctions as a tool to combat international drug trafficking. The Biden administration regularly used sanctions authorities to target cartels (although generally not using the FTO or SDGT authorities) and it appears that the Trump administration is poised to continue that general policy approach.
Under the EO, Secretary of State Marco Rubio has 14 days from the date of the order to make recommendations regarding the designation of any cartel or other organization as an FTO, SDGT, or both. The primary impact of an SDGT designation is the imposition of blocking sanctions. An FTO designation prohibits US persons or those subject to US jurisdiction from knowingly providing “material support or resources” to that FTO. It also requires US financial institutions to block any funds in their possession in which a designated FTO has an interest.
Depending on which organizations are designated and the authority they are designated under, there may be significant implications for foreign and US companies operating in geographies in which cartels are prevalent.
Houthis Re-Designated as Foreign Terrorist Organization
President Trump re-designated Ansar Allah, also known as the Houthis, as a Foreign Terrorist Organization (FTO). The Houthis were originally designated as an FTO and Specially Designated Global Terrorist (SDGT) in January 2021 under the first Trump administration, on account of continued attacks and destabilizing activities in Yemen and the Middle East more generally. However, the Biden administration subsequently revoked those designations in February 2021 as it shifted the United States’ approach to the civil war and humanitarian crisis in Yemen. The rescission was in response to concerns raised by relief organizations, which feared that the designations would discourage aid from being provided in Yemen.
Even prior to the FTO and SDGT designations, the Trump administration was expected to target the Houthis and other Iranian proxies in the Middle East with additional sanctions. Coupled with the Biden administration’s re-designation of the Houthis as a SDGT in early January 2025, the Houthis are now subject to the same sanctions regimes the first Trump administration imposed.
It remains to be seen how, if at all, the Trump administration will respond now that the Houthis have released 25 crew members of the MV Galaxy Leader, a ship that was seized over a year ago, and claimed that they would stop attacking transit vessels in the Red Sea so long as the Israel-Hamas cease-fire holds.
America First Trade Policy Takes Shape
The Trump administration issued its “America First Trade Policy,” which outlines its immediate priorities in realms such as trade and export controls, and with respect to certain countries, including China.
Notable directives include:
- Assessing and making recommendations regarding legislation that revokes China’s Permanent Normal Trade Relations (PNTR) status;
- Reviewing the current US export controls system and making recommendations regarding export controls enforcement and closing loopholes, and foreign country compliance, among other measures;
- Reviewing and making recommendations on the Office of Information and Communication Technology and Services (OICTS) rules regarding “connected vehicles;” and
- Reviewing and making recommendations on Executive Order (EO) 14105, “Addressing United States Investments in Certain National Security Technologies and Products in Countries of Concern,” and its implementing regulations (i.e., the outbound investment rules or “reverse CFIUS”).
The policy suggests that, as in the first administration, President Trump plans to closely tie his trade agenda with his national security agenda. It remains to be seen how and when the America First Trade Policy directives will lead to policy or regulatory changes.
Lawmaker Reintroduces Russia Sanctions Bill
The Ranking Member of the House Foreign Affairs Committee, Rep. Gregory Meeks (D-NY), reintroduced two Russia-related sanctions bills: the No Russian Tunnel to Crimea Act (H.R. 476), which requires the President to impose sanctions on any foreign person who knowingly participates in the construction, maintenance, or repair of tunnels or bridges connecting Russia to Crimea; and the Sanction Russian Nuclear Safety Violators Act of 2025 (H.R. 475), which requires the President to impose sanctions on persons who endanger the Zaporizhzhia Nuclear Power Plant.
At present, H.R. 476 and H.R. 475 seem unlikely to pass as stand-alone bills. However, if President Trump seeks to apply greater pressure on Putin in a negotiation over settling the war in Ukraine, the bills potentially could be incorporated into a larger Russia-related sanctions package. Rep. Meeks’s reintroduction of the bills will also serve as an early test of bipartisan support for legislation targeting Russia in the new Congress.
Key Lawmaker Calls for More Sanctions Actions on Sudan
Rep. Meeks also recently praised the Biden administration’s sanctioning of both the Sudanese Armed Forces (SAF) and Rapid Support Forces (RSF) leaders, as well as its genocide determination with regard to the latter. Rep. Meeks continued to urge the Trump administration to place an “early emphasis” on addressing the conflict in Sudan, and noted that he would work with colleagues to reintroduce the U.S. Engagement in Sudanese Peace Act. The U.S. Engagement in Sudanese Peace Act, as previously introduced, would have required the President to identify persons in Sudan that have engaged in war crimes or human rights abuses or violations of the United Nations arms embargo on Darfur, and impose a variety of sanctions on those identified persons.
China Committee Chair Supports Greater Trade Restrictions With China
In recent remarks, the Chair of the House Select Committee on the Chinese Communist Party, Rep. John Moolenaar (R-MI), noted that export controls and outbound investment restrictions should be among the Trump administration’s top priorities as it crafts its China policy. He also suggested that President Trump’s nominee for Secretary of Commerce, Howard Lutnick, shares this sentiment.
Many observers expect the Trump administration will maintain or expand on the Biden administration’s use of export controls to restrict the flow of US technology to China. President Trump’s stance on outbound investment is more uncertain. The America First Trade Policy issued by President Trump addresses both facets of US trade restrictions, directing the Secretary of Commerce and, in some instances, the Secretary of State, to review existing US export controls and advise on modifications regarding structure and enforcement; it also directs the Secretary of the Treasury to review the new outbound investment rules and its implementing regulations.
Rep. Moolenaar’s comments indicate that there remains strong Congressional support for greater trade restrictions on China. It remains to be seen, however, whether the new Congress will play much of a role in the implementation of these restrictions, many of which can be altered without Congressional action. Rep. Moolenaar and colleagues introduced the Comprehensive Outbound Investment National Security Act, or COINS Act, in the previous Congress, and the bill was expected to pass as part of a continuing resolution (CR) with bipartisan support. However, it was ultimately left off the CR that passed.
EU Developments
EU Mulls Gradual Suspension of Sanctions on Syria
The European Union is reportedly contemplating a phased suspension of economic sanctions on Syria to support the country's transition while maintaining some influence. EU foreign ministers are set to discuss this approach during a meeting in Brussels on January 27. This policy reassessment follows the ousting of President Bashar al-Assad by insurgent forces led by the Islamist group Hayat Tahrir al-Sham (HTS), which the United Nations classifies as a terrorist organization.
EU Considers Belgian Royal Decree to Maintain Sanctions Against Russia
EU officials are exploring the use of an 81-year-old Belgian wartime decree to uphold sanctions against Russia if Hungary follows through on its threat to veto their renewal. Hungarian Prime Minister Viktor Orbán has suggested he might block the sanctions rollover, pending US President Donald Trump's stance on American sanctions against Russia. The EU aims to keep €190 billion in Russian state assets frozen in Belgium-based clearing-house Euroclear, crucial for a $50 billion loan to Ukraine. As a contingency, the EU may invoke a decree allowing Belgium's King Philippe to block asset transfers. Belgium’s foreign ministry remains hopeful about reaching an agreement despite the challenges.
