OPINION: EU Agricultural Tariffs on Russia and Belarus Could Cripple Local Economies

The European Union is seeking to enforce further agricultural tariffs on Russia and Belarus in a move that could further weaken the Kremlin’s effort to wage war in Ukraine and maintain political support domestically.

The EU has previously imposed tariffs on 15% of the two nations’ agricultural exports as recently as 2023. This follows a series of sanctions adopted by the European Union over the past decade, in an attempt to curb Russia’s war in Ukraine.

The Commission has claimed that reliance on resources from Russia and Belarus can pose threats to the EU’s food supply. As a result, the Commission sees a variety of advantages to implementing these additional tariffs, including expanded opportunities for domestic EU production.

Establishing larger scale domestic production of these resources will ensure a stable supply of these resources, and at a cost projected to remain affordable for EU farmers. Even more, the EU’s ability to gain greater self-sufficiency in the agricultural sector limits the potential for Russia to influence the EU’s agricultural capabilities and food production.

A precautionary tale

Europe’s bid to place tariffs on Belarus serves as a precautionary measure to prevent Russia from using their close ties to the nation to bypass sanctions, thus making the restrictions on Russia’s economy more impactful.

If imposed, these tariffs could result in greater tensions between the EU and Russia. 

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Russia may choose to retaliate with tariffs of their own, increasing the odds of a continental trade war. This has the potential to affect other trade sectors as well – including energy, metals, and minerals – and influence the economies of other nations. 

Although Russia’s agricultural exports span beyond the European Union, the financial implications of additional tariffs can have pernicious effects on Russia’s already hampered war-time economy too. 

Russia is also a major export partner to other countries, like Brazil, India, and China, but these markets alone may not be enough to make up for the decline in the European market. And raising the prices of exports to these nations to make up for lost profits and product distribution poses the risk of creating tension and conflict in presently established trade relationships.

Flooding the Russian market leads to hardship

Fewer exports can lead to oversaturation in Russia’s domestic markets. 

However, this could initially benefit domestic consumers, the price depreciation of these exports will inevitably take a toll on producers who benefit from the international business. 

Subsequently, the scale of fertilizer production at its current state will no longer be sustainable, and will result in decreased production of fertilizers – raising the cost for domestic consumers. This, consequently, could lead to inflation in food prices, creating additional challenges for Russians facing financial hardships. 

Potential food cost inflation aside, the tariffs also have the potential to affect Russia’s food production, both in quantity and quality. 

If essential fertilizers increase in cost or decrease in supply, Russian farmers may have to make sacrifices. Farmers may produce less viable crops due to reduced fertilizer use, which can destabilize the food supply, causing the nation to rely more on foreign food imports.

If the tariffs are enforced, these domestic economic obstacles have the ability to inhibit Russia’s fighting power in Ukraine. The consequences are indirect, but negative nonetheless. 

The government may be forced to reallocate funds and resources, leaving them in a position to choose between prioritizing domestic needs and war ambitions. In areas where support for the war is less than favorable, particularly in rural towns, the economic and political outcomes can lead to civil unrest.