As Trump continues to wow even his critics with his choices to serve in top jobs during his second term, two crucial appointees will drive his economic agenda.
Scott Bessent, Trump's nominee for Treasury secretary with Ivy League credentials (Yale), is a prominent billionaire hedge fund manager. Howard Lutnick, the chief executive of Cantor Fitzgerald and Trump's economic policy transition chief, is Trump's pick for commerce secretary this week. These two finance industry titans will drive Trump's priorities on taxes and tariffs. With Trump's selections of Elon Musk and Vivek Ramaswamy to head the quasi-agency Department of Government Efficiency (DOGE), wasteful spending, fraud, inefficiency, deficits, and the federal debt are front and center, unlike at any time in at least 40 years.
Trump should also unleash the creativity of these picks to reexamine America's sanctions regime, which Bessent, the Treasury secretary, will manage. Trump should direct his team to authorize and implement sanctions only to further America's MAGA goals—around tariffs, border security, drug enforcement, and crime. It is time for America to return to the relatively peaceful, prosperous, inward-looking nation under Bill Clinton's two terms and abandon the globalist and elitist model that America embraced under every president since George W. Bush and 9/11.
America's sanctions regime is killing the dollar's viability as countries worldwide see firsthand the ability of the United States government to inflict pain on every country with which it disagrees.
Administrations of both parties are guilty of weaponizing the dollar to further America's foreign policy goals. The Treasury Department's Office of Foreign Assets Controls (OFAC) wields enormous power to block fund transfers to countries, groups, or individuals subject to American sanctions. In a 2021 paper, the Treasury reported that 9,421 sanctions designations were active, a 933% increase since 9/11, as American administrations have used dollarization as a primary diplomatic weapon.
Since February 2022, the Biden-Harris Treasury has implemented over 2,500 sanctions on Russia, nearly a quarter of all sanctions against all countries in the last 21 years. These sanctions encompass numerous Russian banks, wealth management-related entities, individuals who play key roles in Russia's financial services sector, and companies involved in Russia's military-industrial complex.
For an administration that made democracy its key rallying cry to denigrate Trump at every turn right through Election Day, the Biden-Harris sanctions regime is totally undemocratic. An international entity sanctioned by America is entirely at the mercy of America's bureaucrats since no judicial review is allowed.
What irritates the world is the hubris of administration officials in exploiting the dollar's status as the global reserve currency. In a press release 18 months ago, Treasury Secretary Janet Yellen, in promoting Russia sanctions, said:
As the Ukrainian people continue to valiantly defend their homeland and their freedom, the United States is proud to support Ukraine through economic, security, and humanitarian assistance. Over the past year, we have taken actions with a historic coalition of international partners to degrade Russia's military-industrial complex and reduce the revenues that it uses to fund its war. Our sanctions have had both short-term and long-term impact, seen acutely in Russia's struggle to replenish its weapons and in its isolated economy. Our actions today with our G7 partners show that we will stand with Ukraine for as long as it takes.
The problem with Yellen's claims is that they are all untrue today.
Russia is not as isolated as Yellen wants it to be. President Putin has hosted international conferences and freely traveled to friendly nations on state visits, a far cry from Yellen's claims that American sanctions have been effective in isolating him.
TIPP estimates that Putin has visited at least 23 countries since the Ukraine war started, with a significant state visit to India planned shortly. To be sure, many of his visits have been to former Soviet client states, such as Tajikistan, Turkmenistan, Uzbekistan, Kazakhstan, Kyrgyzstan, and Belarus, each of which treated him with a red welcome. Putin has also engaged in pompous state visits with American allies, such as the United Arab Emirates, Vietnam, and Saudi Arabia. President Xi of China visited him in Moscow and received him in Beijing on a grand scale.
During the recent BRICS Summit in Russia, an essential topic of conversation was the alternative BRICS currency, which, managed by five nations - Brazil, Russia, India, China, and South Africa - can never be used as a strategic weapon against other countries. The currency discussion was a direct dig at Yellen's claims.
Russia has worked with pariah nations, including Iran and North Korea, to steadily replenish its weaponry. In the latest twist, North Korea has not only been shipping artillery and missiles to Russia but also sent its troops to train with the Russian military to defend the Kursk region, which Ukraine currently holds. The BBC reported this week that Russia has directly transferred one million barrels of oil to North Korea as a gift, in violation of existing sanctions.
Western sanctions have not reduced Russian oil revenues, which Russia uses to fund its war. An October 14 New York Times report showed how Russia has largely evaded sanctions aimed at limiting its revenue from oil sales as Russian oil freely flowed through the Western "Price Cap."
Ukraine is losing the war. While Russia is taking in massive casualties, Ukraine is taking many more. Ukraine is running out of soldiers to fight and is steadily ceding territory in the Donbas. With the onset of winter, Ukraine's decimated infrastructure and power grid will make defending territory even more challenging.
The point is that the overuse of sanctions has made them ineffective. With Trump's new mandate, he should reexamine every sanction in the book and retire them unless they are needed to directly help his MAGA goals. The goodwill this would result in would strengthen America's global standing and improve international relationships.
