Treasury Secretary Janet Yellen on Tuesday suggested that the EU could impose a tariff on Russian oil imports as a way to hurt Russian profits before a total embargo on Russian oil.
Yellen met with EU Commission President Ursula von der Leyen in Brussels ahead of a G7 meeting to discuss the EU’s next round of sanctions on Russia. The EU has proposed a phased Russian oil ban that would give most EU nations until the end of 2022 to stop importing the product.
Hungary and Slovakia, two countries heavily reliant on Russian oil, would have until the end of 2023. But Hungary is strongly opposed to the plan and says the EU hasn’t offered a way to offset the economic cost of cutting off Russian oil.
In the meantime, Yellen thinks the EU should take other steps to hurt Russia. “They’re talking about the next year as a time frame and in the meantime it might be possible to combine a phase-out with a price mechanism, but there are a lot of options here,” Yellen said. “It is critically important that they reduce their dependence on Russian oil.”
Treasury officials said that the tariff would have to be high enough to hurt Russian profits but low enough to incentivize Russia to keep exporting oil. The officials said that the idea would be proposed to more European nations at the G7 meeting later this week.
However the EU decides to wean itself off Russian oil will have a severe economic impact on Europe since the continent is heavily reliant on Russian energy. Measures like tariffs also run the risk of Moscow deciding to cut the EU off without notice, which could throw Europe into a serious recession.