Patrick E. Shea, Senior Lecturer in International Relations and Global Governance, University of Glasgow
The US president, Donald Trump, recently announced that Russia had 50 days to end its war in Ukraine. Otherwise it would face comprehensive secondary sanctions targeting countries that continued trading with Moscow.
On July 15, when describing new measures that would impose 100% tariffs on any country buying Russian exports, Trump warned: “They are very biting. They are very significant. And they are going to be very bad for the countries involved.”
Secondary sanctions do not just target Russia directly, they threaten to cut off access to US markets for any country maintaining trade relationships with Moscow. The economic consequences would affect global supply chains, targeting major economies like China and India that have become Russia’s commercial lifelines.
Despite the dire threats, Moscow’s stock exchange increased by 2.7% immediately following Trump’s announcement. The value of the Russian rouble also strengthened. On a global scale, oil markets appear to have relaxed, suggesting traders see no imminent risks.
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This market reaction coincided with a nonplussed Moscow. While official statements noted that time was needed for Russia to “analyse what was said in Washington”, other statements suggested that the threats would have no effect. Former Russian president Dmitry Medvedev, for example, declared on social media that “Russia didn’t care” about Trump’s threats.
The positive market reaction and lack of panic from Russian officials tell us more than simple scepticism about Trump’s willingness to follow through.
If investors doubted Trump’s credibility, we would expect market indifference, not enthusiasm. Instead, the reaction suggests that financial markets expected a stronger response from the US. As Artyom Nikolayev, an analyst from Invest Era, quipped: “Trump performed below market expectations.”
A reprieve, not a threat
Trump’s threat isn’t just non-credible – the positive market reaction in Russia suggests it is a gift for Moscow. The 50-day ultimatum is seen not as a deadline but as a reprieve, meaning nearly two months of guaranteed inaction from the US.
This will allow Russia more time to press its military advantages in Ukraine without facing new economic pressure. Fifty days is also a long time in American politics, where other crises will almost certainly arise to distract attention from the war.
More importantly, Trump’s threat actively undermines more serious sanctions efforts that were gaining momentum in the US Congress. A bipartisan bill has been advancing a far more severe sanctions package, proposing secondary tariffs of up to 500% and, crucially, severely limiting the president’s ability to waive them.
By launching his own initiative, Trump seized control of the policy agenda. Once the ultimatum was issued, US Senate majority leader John Thune announced that any vote on the tougher sanctions bill would be delayed until after the 50-day period. This effectively pauses a more credible threat facing the Kremlin.
This episode highlights a problem for US attempts to use economic statecraft in international relations. Three factors have combined to undermine the credibility of Trump’s threats.
First, there is Trump’s own track record. Financial markets have become so accustomed to the administration announcing severe tariffs only to delay, water down or abandon them that the jibe “Taco”, short for “Trump always chickens out”, has gained traction in financial circles.
This reputation for failing to stick to threats means that adversaries and markets alike have learned to price in a high probability of backing down.
Read more: Investors are calling Trump a chicken – here's why that matters
Second, the administration’s credibility is weakened by a lack of domestic political accountability. Research on democratic credibility in international relations emphasises how domestic constraints – what political scientists call “audience costs” – can paradoxically strengthen a country’s international commitments.
When leaders know they will face political punishment from voters or a legislature for backing down from a threat, their threats gain weight. Yet the general reluctance of Congress to constrain Trump undermines this logic. This signals to adversaries that threats can be made without consequence, eroding their effectiveness.
And third, effective economic coercion requires a robust diplomatic and bureaucratic apparatus to implement and enforce it. The systematic gutting of the State Department and the freezing of United States Agency for International Development (USAID) programmes eliminate the diplomatic infrastructure necessary for sustained economic pressure.
Effective sanctions require careful coordination with allies, which the Trump administration has undermined. In addition, effective economic coercion requires planning and credible commitment to enforcement, all of which are impossible without a professional diplomatic corps.
Investors and foreign governments appear to be betting that this combination of presidential inconsistency, a lack of domestic accountability, and a weakened diplomatic apparatus makes any threat more political theatre than genuine economic coercion. The rally in Russian markets was a clear signal that American economic threats are becoming less feared.
Patrick E. Shea does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
