A surge in global tariffs initiated by the Trump administration has heightened concerns of an international recession and caused a downturn in energy markets.

When tariffs are extensive and elevated—such as the recent ones affecting the U.S. and its trade partners—they can compel businesses to limit production to a single country. This situation drives up manufacturing costs and adversely impacts factories, particularly in Asia, along with shipping companies.

If tensions in the trade war intensify, production of goods may decline, leading to higher prices and a global economic downturn, along with reduced energy demand.

Although Russia is not a major exporter to the U.S.—and is not among the nations targeted by Trump’s tariffs—it could still be impacted by declining oil prices and increased import costs.

Goldman Sachs predicts that if the U.S. avoids recession and reduces tariffs, Brent crude prices may average $62 by December 2025; however, if the economy contracts, prices could drop to $58, according to Reuters.

In its budget forecasts, the Russian government anticipates that the Urals oil price, a Russian blend sold at a discount to Brent, will average $69.70 per barrel in 2025.

In light of trade war anxieties, the Urals benchmark price has plummeted below $50 per barrel for the first time since June 2023, as reported by RBC, referencing estimates from Argus Media.

While oil prices have recovered with Trump temporarily halting some tariffs, uncertainty lingers due to ongoing trade negotiations with the U.S.’s key partners, especially China and the EU.

As energy markets face oversupply and global demand softens, Russia risks losing its status as a significant exporter, particularly as buyers—especially in Asia—may begin to seek larger discounts compared to oil and liquefied natural gas from Middle Eastern suppliers and others.

Moreover, each $10 reduction per barrel in Russian oil exports translates to approximately $17 billion annually in lost revenue. Although this is not ideal, it is not catastrophic; this figure represents roughly 4% of Russia’s total exports in 2023, which were valued at $425.1 billion.

Russia’s oil extraction will not cease, either.

Analyst Sergei Vakulenko notes that the average cost to produce, process, and transport Russian oil to export terminals, including drilling expenses, is around $17 per barrel.

However, declining energy prices would result in reduced foreign currency inflows for Russian companies and lower tax payments to the government.

A shortage of foreign currency could devalue the ruble, increasing the costs of imports in the country—all during a period when inflation is nearing 10%.

This comes on top of anticipated increases in consumer product prices such as automobiles, apparel, and electronics.

For instance, the price of a Chinese-manufactured iPhone 16 Pro Max with 256GB storage, currently retailing for $1,199, could potentially rise to $1,999 as a consequence of the tariff disputes, as reported by CNN citing UBS Investment Research analysis.

An estimated 25% of a typical Russian consumer’s shopping basket includes imported items.

Additionally, a shortfall in tax revenues could hinder budget financing.

Last year, Russia concluded with a deficit of around 3.5 trillion rubles, about $34.4 billion, and its accessible reserve fund has diminished by more than half since the onset of the conflict.

For the first quarter of 2025, the federal budget deficit reached approximately $25.5 billion, significantly larger than the same period last year and exceeding the total projected deficit for the entire year. This was driven by a nearly 10% drop in oil and gas revenue compared to last year, alongside a nearly 25% rise in expenditures.

The Telegram channel MMI reported that the government utilized 27.1% of its planned annual expenditure in the first quarter of 2025, marking an “all-time high.”

While spending surged in early 2024, it was more restrained at that time, and revenue conditions were considerably better.

Despite the worrying signs for the Russian government, the overall situation is not yet critical, according to analyst Pavel Ryabov in his Spydell Finance blog.

“Against the backdrop of budget revenues, the annual deficit sits at 14.5%, which is in the risky ‘yellow zone,’ whereas a budget crisis typically sees deficits exceed 20% of revenues,” he stated.

The combination of these economic pressures could potentially slow down Russia’s growth.

The Kremlin is unable to lower inflation to its target of 4%, but it has managed to keep it in check.

Consequently, Russia will need to reduce expenditures that have, in many respects, fueled economic growth.

“The Finance Ministry must significantly retract the fiscal stimulus in the coming nine months to maintain the deficit within a relatively acceptable range, which will negatively affect economic activity that heavily relies on fiscal measures,” Ryabov explained.

The Central Bank has identified potential trade conflicts as a significant risk to its economic outlook for 2025-2027, which was published last August.

In a worst-case scenario, the Bank predicts that the Russian economy could contract by as much as 4% in 2025 and by up to 2% in 2026, with the nation’s reserve fund potentially running out of money by 2025.