Divergent U.S. and EU sanctions reflect growing Western geopolitical rift
Seismic shifts in foreign policy priorities fuel major differences between American and European sanctions regimes.
In a nutshell
- U.S. and EU sanctions on Russia risk diverging further
- U.S. targets Tehran’s energy clients, while the EU addresses human rights
- Washington’s first-ever secondary tariffs threaten EU interests
- For comprehensive insights, tune into our AI-powered podcast here
While the United States and European Union continue to use sanctions as key foreign policy tools, cracks are emerging in their geopolitical approaches and objectives. This contrasts with their close coordination on sanctions during former U.S. President Joe Biden’s administration, particularly following Russia’s full-scale invasion of Ukraine in 2022.
The coming months will determine whether the fraying Western alliance can remain united on critical global trade restrictions and enforcement, such as those targeting Russia, Iran and Venezuela, or if differing priorities will lead to long-term regulatory and geopolitical fragmentation.
U.S. administration’s mixed signals on Russian sanctions
Washington’s negotiations to end Russia’s war against Ukraine and normalize U.S. relations with Moscow have raised questions about the sustainability of coordinated U.S. and EU sanctions against the Kremlin.
The new Trump administration has discussed lifting sanctions on Russia while also striking energy and minerals deals with Russian President Vladimir Putin. As a goodwill gesture, the U.S. has not imposed new restrictions to pressure Russia but has not rescinded existing ones either. For the first time since the invasion of Ukraine, the U.S. did not impose new sanctions against Russia to mark the third anniversary of the war in February 2025. Furthermore, the Biden-era enforcement initiative, Task Force Klepto-Capture, was disbanded. This task force, part of the Department of Justice, was instrumental in enforcing sanctions against Russian oligarchs and seizing high-profile assets.
Facts & figures
Russian ruble appreciates against the U.S. dollar
In March, Reuters reported that Washington had agreed “to push to lift some sanctions against Moscow.” This effort followed Russia’s agreement to pause attacks in the Black Sea and against energy targets, along with a U.S. commitment “to help seek the lifting of international sanctions on Russian agriculture and fertilizer exports.”
Moscow stated that any agreement would require sanctions relief, including “restoring links between Russia’s agricultural bank and the SWIFT international payments system.” However, successful implementation hinged on securing agreement from the EU, which was unlikely given the bloc’s markedly different approach to Russia.
In April, the online news outlet Politico reported that the White House was debating lifting sanctions on Russia’s Nord Stream 2 natural gas pipeline and potentially other assets in Europe. Steve Witkoff, the special envoy to Russia and a close associate of U.S. President Donald Trump, has been the main advocate for lifting sanctions. According to Politico, Mr. Witkoff had reportedly compiled a list of U.S. energy sanctions on Russia as part of his advocacy efforts. However, in a joint statement released from the White House, U.S. Secretary of State Marco Rubio and Mr. Witkoff denied these discussions.
A further sign of the administration’s apparent divisions over Russian sanctions was evident in President Trump’s extension of Obama-era measures related to the annexation of Crimea until March 6, 2026. The restrictions, first imposed in 2014, are renewed annually.
Currently, the U.S. Congress, including many Republicans, is largely skeptical of a peace deal being agreed upon for Ukraine. Some have threatened Moscow with further sanctions if it does not engage in good faith negotiations.
EU leaders have been scrambling to develop effective responses to the foreign policy challenges arising from the new U.S. stance on Russia’s war in Ukraine.
President Trump has supported recent bipartisan legislation spearheaded by his close ally, Senator Lindsey Graham, which would impose hefty secondary tariffs of 500 percent on buyers of Russian oil, petroleum products, natural gas or uranium if Moscow fails to negotiate with Ukraine. However, he has yet to approve the legislation and in late May, said he would maintain his wait-and-see approach. Earlier, Mr. Trump had warned of imposing 50 percent secondary tariffs on Russian oil if President Putin delayed talks, although this threat passed following Mr. Putin’s offer to hold peace negotiations in Istanbul.
Throughout the spring, President Trump has erratically mentioned increasing sanctions on Russia but has not taken any steps. Recent verbal clashes between the U.S. and Russian presidents, sparked by a major Russian attack on Ukraine, triggered further threats of sanctions by Mr. Trump, which may yet tip the scales in favor of such action.
Brussels doubles down on Russian sanctions
EU leaders have been scrambling to develop effective responses to the foreign policy challenges arising from the new U.S. stance on Russia’s war in Ukraine. So far, the EU has stayed the course: It issued its 16th tranche of sanctions in February. These measures cover a wide range but focus mainly on non-Russians collaborating with the Kremlin.
These included new “ancillary” measures, similar to the U.S. secondary sanctions on non-Russian individuals and entities dealing with the Kremlin’s military, industry and shadow fleet vessels. Most of the ancillary sanctions were imposed on Chinese, Belarusian and North Korean enterprises and individuals providing “material support” to Russia’s war effort.
Also notable were bans on EU operators participating in the reconstruction of Russian-occupied regions of Ukraine, which may signal the EU’s posture on maintaining sanctions after a potential ceasefire or permanent peace deal. This is the first time the EU has issued a round of sanctions related to the Russian invasion without simultaneous measures from the U.S.
Facts & figures
What are secondary sanctions?
Secondary sanctions are penalties a country imposes to deter foreign entities from engaging with individuals, companies or nations already under primary sanctions. Unlike primary sanctions, which directly restrict dealings with sanctioned parties, secondary measures target entities outside the affected country’s jurisdiction. As a result, they create a broader ripple effect that influences international business and diplomacy.
The 17th sanctions package, adopted on May 20, targeted Russia’s shadow fleet for circumventing the G7 oil price cap and several major Russian energy players, while also designating a third-country subsidiary, marking a significant escalation in the EU’s extraterritorial approach. Furthermore, the 18th package (which is currently in its planning stages) aims to extend extraterritoriality to third country financial institutions that facilitate imports of Russian energy, increasingly resembling previous U.S. secondary sanctions on Russia.
Brussels has further asserted that Russia’s central bank assets should remain immobilized until it ends its war against Ukraine and compensates Kyiv for the damage caused by the conflict. This policy indicates that the EU views Russia’s actions as a major threat to its security and foreign policy.
The EU’s firm stance on maintaining and expanding sanctions against Russia, unlike America’s uncertain approach, will likely complicate compliance for global businesses. Nevertheless, it has been reported that Western companies, particularly those from the U.S., are planning strategies to reenter the Russian market. This could pose a significant challenge to the effectiveness of the EU’s ongoing sanctions.
Washington ramps up sanctions on Tehran
Sanctions on Iran have also highlighted the divergence between U.S. and EU policies. After withdrawing in 2018 from the Iran nuclear deal, called the Joint Comprehensive Plan of Action (JCPOA), the first Trump administration reimposed stringent sanctions on Iran. These measures focused on Iran’s oil exports, its financial institutions and individuals associated with its nuclear program.
Under the current Trump administration, the U.S. has been actively engaged in technical negotiations with the Iranian regime in Oman. Washington has also maintained sanctions pressure on Tehran by targeting key Iranian players, international facilitators and those in foreign markets buying oil from the country. In February, new sanctions against Iran were launched to restore maximum pressure on the country.
As part of the measures, the U.S. Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Iran’s minister of petroleum, several oil tanker operators and vessel owners. The first to be sanctioned were Iranian individuals and companies in the oil storage sector. This was followed by secondary sanctions on Emirati-, Chinese-, Indian-, Malaysian- and Seychelles-owned oil brokers and shippers along with their vessels.
OFAC also sanctioned several Chinese companies involved in procuring aviation parts used in Iran’s manufacture of drones, many of which are supplied to Russia for use in Ukraine. These actions have been carried out in accordance with an executive order on weapons of mass destruction.
In April, OFAC sanctioned a Chinese “teapot” refinery (a small, independent oil refinery in China) for purchasing over $1 billion in Iranian oil, along with several companies and vessels responsible for shipments to the refinery. Mr. Trump has gone further by warning that any country or person buying Iranian oil or petrochemicals will immediately be “subject to … Secondary Sanctions” and “will not be allowed to do business with the United States of America in any way, shape or form.”
The EU’s Iran sanctions focus on human rights and Russia
In contrast to the U.S., the EU has sought to preserve the JCPOA by establishing mechanisms like the Instrument in Support of Trade Exchanges to facilitate trade with Iran (particularly in humanitarian goods), circumventing U.S. sanctions and maintaining economic engagement.
The European bloc has imposed sanctions against Iran for human rights abuses and military support for Russia’s war against Ukraine. The EU implemented Iranian sanctions focused on human rights in 2011, renewing them annually since then, with the latest extension valid until April 2026.
More by trade and regulations expert Bob Savic
- Sanctions and the geopolitics of trade
- Circumventing sanctions through innovation
- China-U.S. trade conflict risks full-on economic decoupling
In April, the European Council sanctioned Iranian judges, a court and prison officials for human rights violations, including using the judiciary for arbitrary detentions. Three rounds of drone-related sanctions were also implemented against Iranian entities, along with the establishment of a framework to counter its military support for Russia.
U.S. novel secondary tariffs clash with EU interests over Venezuela
The U.S. has implemented comprehensive trade restrictions targeting Venezuela’s oil industry, government officials and state-owned enterprises. These measures aim to pressure Venezuelan President Nicolas Maduro by cutting off the country’s primary revenue-generating sources – energy exports.
The various steps involved issuing a new executive order authorizing the imposition of “secondary tariffs” – a concept that previously did not exist in American law–on imports in the U.S. from countries buying Venezuelan oil. These secondary tariffs raise the possibility of further exposure to U.S. levies for EU nations like France, Italy and Spain, which are among the largest importers of Venezuelan crude oil.
Although their implementation is at the discretion of the U.S. Secretary of State, it remains unclear how frequently, if ever, this authority will be used to impose tariffs on offending countries.
The EU’s approach has been more nuanced. While it has imposed sanctions on the Venezuelan government, these are specifically aimed at individuals responsible for undermining democracy and committing human rights violations, rather than broad economic measures. Brussels has not adopted wide-scale punitive measures on the economy or third parties.
The growing divergence in legal approaches between the U.S. and the EU may result in potential conflicts regarding their economic interests. This could even prompt the EU to consider retaliatory actions, such as its Anti-Coercion Instrument.
Scenarios
Likely: U.S. and EU sanctions diverge on unilateral and multilateral grounds
This year’s growing rifts between U.S. and EU sanctions highlight fundamental differences in their foreign policy strategies, economic priorities and international alliances. Although both sanctioning jurisdictions persist in implementing measures aimed at shaping the behavior of primarily non-Western states, their methods and objectives are becoming increasingly distinct.
The U.S.’s strong global financial influence enables it to exert heavy pressure on other countries. As a result, the Trump administration is likely to use unilateral authority to coerce rival states further into complying with its foreign policy goals.
The EU operates within a different framework; despite its economic power, it has limited power to enforce sanctions globally. The bloc is expected to focus on building coalitions with Western allies like Canada and Japan. It is also likely to increase efforts to engage with non-Western partners such as China, India and the wider Global Majority to support its enforcement of sanctions, particularly against Russia.
Equally likely: U.S. and EU sanctions differ by region but increasingly use extraterritoriality
As the U.S. potentially reduces sanctions pressure on Russia, albeit subject to an increasingly erratic and seemingly deteriorating relationship between the White House and the Kremlin, the EU appears set on staying the course. According to the Financial Times, EU foreign policy chief Kaja Kallas has expressed her stance on maintaining sanctions against Russia. She has outlined the possibility of a “plan B” in case President Trump decides to pull out of the Ukraine peace talks and pursue a closer relationship with Russia, which might include lifting sanctions.
With U.S. discussions with Russia and Ukraine to achieve a ceasefire or peace agreement to end hostilities so far unsuccessful, European capitals have persisted in their calls to seize Russian central bank assets held in Europe. These funds would support Ukraine’s post-war defense and reconstruction efforts.
Ultimately, the EU is on the road toward having a stronger sanctions regime against a country – in this case, Russia – than the U.S. Historically, Washington has imposed sanctions on countries with which the EU sought to establish normal economic relations, but now the situation has reversed.
As for other sanctioned countries, such as Iran and Venezuela, the U.S. is in the traditional position of imposing more rigorous and extensive sanctions, while the EU leans toward diplomacy with limited sanctions.
In other respects, there seems to be some degree of alignment between the U.S. and the EU in their growing use of extraterritorial trade restrictions, although this is taking place in their respective more-targeted sanctioned regions.
For the first time, Washington has introduced legislation for secondary tariffs, taxing imports from countries buying Venezuelan oil. If the congressional bill is passed, the same may soon apply to Russia. This cross-border tariff approach is a new, potentially harsh measure against third countries.
The EU has also developed a more extraterritorial approach to Russia. Its sanctions framework, known as ancillary listings, is similar to U.S. secondary sanctions. These measures impose full asset-blocking and economic resource deprivation sanctions without requiring any direct connection to the EU. In the 16th, 17th and prospectively 18th sanctions packages, ancillary listings have been and will be applied to various corporate entities and individuals from third countries providing material support for Russia’s war in Ukraine.
As the EU prepares for a possible decrease in U.S. support for Ukraine in its war with Russia, Brussels seems to be increasingly adopting cross-border measures to prevent third parties from undermining its sanctions. Consequently, the EU’s ancillary listings are becoming a crucial part of a strategy that the bloc is likely to utilize more frequently in the future.
Contact us today for tailored geopolitical insights and industry-specific advisory services.
Sign up for our newsletter
Receive insights from our experts every week in your inbox.
