Overview
The Sanctions Update, compiled by attorneys from Steptoe’s award-winning International Regulatory Compliance team and the Stepwise: Risk Outlook editorial team, publishes every Monday. Guided by the expertise of Steptoe’s industry-leading IRC team, the Sanctions Update compiles and contextualizes weekly developments in international regulatory enforcement and compliance, as well as offers insights on geopolitical context, business impacts, and forthcoming risks.
For more detailed analysis on related issues, see Steptoe’s International Compliance Blog. For information on industry-specific monitoring or bespoke services, please contact the team here.
The Lede: Trump Wields the Power of Sanctions
Donald Trump returned to the White House on January 20, and in the days since has amply demonstrated his commitment to using sanctions as an instrument of national power. A review of the actions shows that President Trump views sanctions as one of many foreign policy tools within a transactional framework of bilateral relations, tracking with his overall approach to statecraft.
President Trump ordered the revocation of sanctions on far-right Israeli settler groups and individuals accused of being involved in violence against Palestinians in the occupied West Bank. This action appears to target two goals. Lifting the sanctions lends support to Israeli Prime Minister Netanyahu, who is under political pressure from far-right members in his coalition government, who have threatened to withdraw and cause the collapse of his government. Helping Netanyahu also creates leverage over the Israeli leader to keep him aligned with Trump’s plans to expand the Abraham Accords, which normalized Israeli relations with some of its Arab neighbors. To close a deal with Saudi Arabia, whose normalization with Israel is viewed as a crowning achievement for the Accords, Trump will need Netanyahu to make some concessions on the future of Palestinians and the status of Jerusalem.
President Trump re-imposed designation of Cuba to the US State Sponsors of Terrorism (SST) list, which President Biden had lifted days before, and also overturned Biden’s decision to rescind the 207 National Security Presidential Memorandum 5 on Cuba policy, which eliminated the “restricted list.” These measures provided legal grounding to impose strict economic sanctions in addition to the US embargo first imposed in 1958. Trump’s moves are consistent with his Cuba policy during his first administration, which sought to impose maximum economic pressure on the Cuban government (and the Cuban military in particular) while creating pressure to permit private sector growth and economic and political empowerment of the Cuban people. With these sanctions back in place, Trump has some leverage should the US decide to engage in political talks with Cuba.
On Russia, President Trump did not lift a single sanction. Instead, he warned the Kremlin that if Russia does not negotiate and “make a deal,” he would impose “high levels of Taxes, Tariffs, and Sanctions on anything being sold by Russia to the United States, and various other participating countries.” Trump wants to use sanctions as leverage to get to an agreement to end the Ukraine war, the swift conclusion of which he made a key campaign promise. He will likely use sanctions as both carrots and sticks during the negotiations, and will not fritter away this leverage in a goodwill gesture.
Over the weekend, President Trump threatened to impose sanctions on Colombia in reaction to a developing effort by the Bogota government to assert its sovereignty and resist US forced repatriation of migrants. Notably, the Trump administration went straight to tariffs as an instrument of power of first choice. President Trump responded to Colombian intransigence by warning that the 25% tariff would be raised to 50% in a week, while also freezing US consular visa operations in Colombia. Colombia threatening to retaliate by imposing retaliatory tariffs. While a compromise was found, the US is holding the threat of tariffs over Colombia as leverage to ensure the deportations proceed as promised. Colombian President Gustavo Petro remains piqued, with increased risks the incident will have additional negative impact on the bilateral relationship, which has grown very close over the past decade-plus, with bilateral trade exceeding $33.8 billion in 2023.
President Trump has stated that he prefers to use tariffs and taxes over sanctions because they have the added upside of generating revenue for the US treasury. However, his day one and subsequent actions show that sanctions will remain part of his play book as he seeks his favorite foreign policy outcome: a deal.
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.
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.
