Trump's Sanctions Policy Marked By 'Worrisome Trends,' Former Treasury Secretary Says

Jacob Lew, a former chief of staff and Treasury secretary under President Barack Obama, called the Trump administration's approach to trade and sanctions “troubling,” saying the administration is placing unneeded stress on U.S. allies and damaging the effectiveness of U.S. foreign policy. Speaking April 30 at the Center for a New American Security, a Washington think-tank focused on national security, Lew was critical of Trump’s 2018 withdrawal from the Iran nuclear deal, was skeptical of the president’s “brute force” approach to trade deals and pointed to “worrisome trends” that he said will lead to U.S. undermining its own sanctions. Among those trends, Lew said, are “ambiguous diplomatic objectives, growing unpredictability, increased unilateral action” and a “narrow focus on isolated policies with less regard for the broader context.”

Notably, Lew said, increased unpredictability and “erratic behavior” by Trump leads “other countries to reconsider their own ability to reliably predict U.S.” policy. Lew said countries will be unmotivated to comply with U.S. sanctions if they think sanctions relief can be achieved in other ways. In March, for example, Trump announced on Twitter he was canceling certain North Korean sanctions (see: 1903220067). When asked to explain Trump's tweet, White House Press Secretary Sarah Huckabee Sanders said on March 22 that “President Trump likes Chairman Kim and he doesn’t think these sanctions will be necessary.”

And in the case of the Joint Comprehensive Plan of Action, Lew said, the U.S. withdrew from the deal “without evidence that Iran broke” the terms. “From the JCPOA withdrawal to a confused romance with a North Korean dictator, other nations now must wonder if sanctions relief will come after they comply with the demand for policy change,” Lew said, “or from an impulsive gesture.” Lew said U.S. enforcement will become more difficult if “our adversaries conclude that they no longer have a rational basis to predict U.S. action.”

Lew was also critical of the administration's April 22 decision to end exemptions for U.S.-imposed Iranian oil sanctions, which takes effect in early May (see 1904220021). Lew said the move will test the U.S.’s ability to “maintain a unilateral sanctions regime” as it damages the economies of “countries whose cooperation we need,” including India, China and Japan. “Without alternate and affordable sources of oil,” he said, “this new policy will create growing tension with close allies and heighten tension with adversaries.” In addition, he said, U.S. sanctions against Iran might achieve the opposite intended effect, possibly triggering a “nationalist backlash that strengthens rather than weakens a failing and maligned regime.”

In general, Lew said, the “nature” of U.S. sanctions has changed under Trump, growing more unilateral and susceptible to “overuse.” He said the U.S’s increase in unilateral sanctions strengthens competitors and drives “a search for a way to do business outside of the dollar and U.S. supply chains.”

But while Lew said the “current trajectory of U.S. economic statecraft is troubling, and it seems unlikely the current administration will deviate from its aggressive unilateralism,” the U.S. has not yet reached the “point of no return.” “But if we continue down this path,” Lew said, “I worry we will hasten the shift.”