WASHINGTON — Tensions between the U.S. and Russia escalated Monday after the U.S. imposed a new round of sanctions on Russian government officials and companies over Ukraine, leaving American apparel and footwear brands selling into the Russian market on edge.
The U.S. imposed sanctions on seven Russian government officials and 17 entities controlled by several government officials in President Vladimir Putin’s inner circle, as tensions over Russia’s insurgency into Ukraine continued to escalate.
A senior Obama administration official said in a press call Monday that the U.S. is holding off on imposing sanctions on key Russian economic sectors, but stressed that the U.S. is poised to impose more severe economic sanctions if Russian troops cross the border into Ukraine or further escalate militarily.
Stephen Lamar, executive vice president of the American Apparel & Footwear Association, said the new sanctions imposed by the U.S. and heated rhetoric coming out of Russia causes a lot of uncertainty for U.S. apparel and footwear brands exporting their products to Russia.
Lamar said he has had ongoing phone calls from concerned members over the crisis.
“This is not just an exporting issue,” he said. “If you are selling in there but your partner [in Russia] or derivative partner are people or entities somehow involved in the sanctions, does that put you at risk? It increases the land mines out there that companies have to step around to keep doing business in Russia.”
Lamar added that companies also have to be “leery” about getting caught in the “crossfire,” particularly if Russia retaliates or counter-sanctions U.S. exports.
Treasury Secretary Jacob Lew said Monday’s targeted actions, taken in close coordination with the European Union, will increase the impact on Russia’s economy as a result of its actions in Ukraine. Russian economic-growth forecasts have dropped sharply, capital flight has accelerated and higher borrowing costs reflect declining confidence in the market outlook.
“Our goal continues to be for Russia to de-escalate the situation so that additional sanctions are not needed,” Lew added. “However, we are resolved to continue to work with our international partners and take the steps required, including action against individuals and entities in specific sectors, if Russia continues to press forward.”
Russia’s deputy foreign minister, Sergei Ryabkov, reportedly condemned the new sanctions and told the Interfax news agency that the Russian government would impose reciprocal sanctions.
The U.S. sanctions targeted three banks and several companies, including the Volga Group, an investment strategy firm; Transoil, a Russian-based freight operator specializing in oil and oil products; Aquanika, a Russian-based mineral water and soft-drink company; Sakhatrans LLC, a transportation firm involved in the construction of the bulk terminal for coal and iron ore exports; Avia Group LLC, a ground infrastructure business for the Business Aviation Center at Sheremetyevo International Airport in Moscow, and construction-asset company Stroytransgaz Holding.
The U.S. Commerce Department also revealed an expansion of restrictions on U.S. exports of high-technology items to Russia.