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Trump’s foreign policy team and the implications for US sanctions policy

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The second Trump administration’s nominees for key foreign policy positions are set to oversee a consequential shift in US sanctions strategy and implementation. While remaining tough on adversaries, these appointees appear poised to deploy economic pressure tools in novel ways – particularly regarding strategic competition with China. 

The emerging picture presents both opportunities and challenges; established compliance playbooks may need revision as lines between traditional sanctions, tariffs, export controls, and investment restrictions become increasingly fluid. Our analysis examines how these key appointments could reshape the landscape and what organizations should expect as they navigate the regulatory environment in the year ahead.

Secretary of State – Marco Rubio

marco rubio

The Secretary of State plays a central role in US sanctions policy. Although other departments and agencies manage implementation of these programs, State Department determinations on diplomatic engagement and multilateral pressure often drive both the design and effectiveness of sanctions.

Marco Rubio’s confirmation hearing in January revealed a more nuanced view of sanctions than his hawkish reputation in Washington might otherwise suggest. In an exchange with Senator Paul, for example, he acknowledged that sanctions are just one tool in a broader diplomatic arsenal and he suggested that he will take a more calibrated approach as Secretary. Rubio defended the utility of sanctions in denying resources to adversaries (particularly regarding Iran), and emphasized the value of sanctions as diplomatic leverage. With respect to Ukraine, Rubio stated that bringing the war to an end will “require concessions from every party” and offered sanctions relief as a potential negotiating tool when engaging Moscow. Altogether, these remarks signal a clear shift in tone from more absolutist positions Rubio has taken in the past, and suggest he may be a voice of pragmatism in the incoming administration.

The first Trump administration saw two Secretaries of State with varying approaches to sanctions. Rex Tillerson, despite his international business background, struggled to effectively coordinate policy across agencies. Mike Pompeo subsequently pushed for more aggressive use of sanctions, particularly regarding Iran’s “maximum pressure” campaign, while attempting to maintain international coalitions. Both faced challenges balancing Trump’s preference for personal diplomacy with institutional support for sanctions-backed pressure campaigns.

Most notably, Rubio’s testimony signaled the potential for a major shift in the US approach to China competition which could reshape how sanctions are deployed against Beijing. Unlike traditional sanctions programs focused on specific behaviors, Rubio articulated a broader challenge of strategic dependency, arguing that “in less than 10 years, virtually everything that matters to us in life will depend on whether China will allow us to have it or not.” His emphasis on China’s dominance of critical minerals, medical supplies, and industrial capacity suggests potential expansion of investment restrictions and export controls, adding on to OFAC’s existing sectoral sanctions program. Rubio acknowledged that confronting China “begins at home,” indicating that his State Department might prioritize industrial policy and supply chain resilience alongside traditional sanctions enforcement. This could mean closer alignment between sanctions policy and other tools like CFIUS reviews, export controls, and industrial subsidies – potentially transforming how the US uses economic pressure against near-peer competitors.

Key Implications: Rubio’s expansive view of strategic competition would reshape international business in significant ways. Companies should prepare for more deliberate coordination between OFAC sanctions, export controls, and CFIUS reviews.

Forward Outlook: We expect new designation categories focused on supply chain dependencies and critical technologies, and particular scrutiny of companies operating in sectors identified as strategic vulnerabilities, such as critical minerals, advanced semiconductors, and biotechnology.

Treasury Department – Scott Bessent

scott bessent

The Treasury Department’s Office of Foreign Assets Control (OFAC) leads the implementation of US sanctions programs, but the Department’s influence extends far beyond sanctions administration. Through its seat on the National Security Council (NSC), the Treasury Secretary plays a crucial role in shaping the administration’s national security strategy. The position also involves engaging with foreign finance ministers through forums like the G7 and G20, promoting collective action to maximize the effectiveness of US economic statecraft.

Scott Bessent, nominated for Treasury Secretary in the second Trump administration, brings a market-focused perspective from his experience as founder and CEO of Key Square Group hedge fund and former chief investment officer. At confirmation hearings in January, Bessent was questioned mainly about trade practices, raising federal revenue, and negotiating leverage. However, Bessent did suggest that the overuse of traditional sanctions may be “driving countries out of the use of the US dollar,” indicating a potential preference for tariffs as an alternative pressure tool that poses less risk to dollar dominance.

During Trump’s first term, Secretary Steve Mnuchin tried to balance the push for aggressive sanctions against concerns about the dollar’s reserve currency status. While OFAC averaged over 1,000 sanctions designations annually during this period, Mnuchin argued for restraint, worrying that overuse of sanctions would “encourage others like Russia and China to conduct transactions in euros or through counter trade.” This caution could be seen reflected in certain actions taken at the time, such as in the 2017 sanctions on North Korea’s weapons program, which drew criticism for an apparent reluctance to target major Chinese financial institutions known to facilitate North Korea’s prohibited programs.

Bessent has made few public remarks on sanctions in the past, however his remarks at his confirmation hearings revealed some clues to his thinking. While supporting Trump’s proposed tariffs on China, he emphasized the need for strategic calibration – distinguishing between broad measures for leverage and targeted interventions for specific policy objectives. His comments to Senator Young about preventing “unintended escalation” suggest appreciation for the technical challenges of managing complex sanctions programs. However, he also promised to take sanctions on Russian oil companies to unprecedented levels if needed to force Moscow to negotiate on Ukraine.

In the past, Bessent has explicitly framed tariffs as a form of economic sanctions, proposing an integrated approach to economic statecraft that leverages America’s “three key advantages” – military strength, financial dominance, and market size. His support for Trump’s proposed tariffs on Chinese goods, while advocating for gradual implementation, indicates a willingness to deploy more aggressive measures than previous Treasury leadership. This could mean more frequent use of secondary sanctions and other tools of financial pressure.

Beyond policy direction, Bessent will be responsible for key personnel appointments, particularly the Director of OFAC – a position critical to sanctions implementation and enforcement. OFAC’s leadership has traditionally been drawn from career officials with deep technical expertise in sanctions law and financial crime. Other key appointments to watch include the Under Secretary for Terrorism and Financial Intelligence, who oversees OFAC and other security-focused Treasury offices, and the Assistant Secretary for Terrorist Financing – roles that have historically balanced technical expertise with political alignment.

Key Implications: Bessent’s support of tariffs could lead to novel or hybrid approaches in economic policy, such as combining existing sanctions designations with punitive economic measures that restrict trade. This would create new compliance challenges for companies managing supply chains across multiple international jurisdictions.

Forward Outlook: We expect the Treasury Department to focus on restricting US market access rather than solely relying on cutting off adversaries from the international financial system, with increased use of tariff-based pressure alongside traditional tools, particularly in the China context.

Ambassador to the United Nations – Elise Stefanik

elise stefanik

The US Ambassador to the United Nations has an important yet often understated role in sanctions implementation. The job entails building international support for US sanctions programs and leveraging America’s permanent seat on the UN Security Council to strengthen multilateral sanctions while vetoing resolutions that would undermine them. Through public statements and engagement with the UN General Assembly, the ambassador shapes global perception of US sanctions, particularly on high-profile issues like Iran, North Korea, and the Israeli-Palestinian conflict.

Trump’s nominee for UN Ambassador, Elise Stefanik, brings experience from two congressional committees central to US foreign policy. Her service on the House Armed Services Committee has involved oversight of defense policies, including security assistance and arms transfers to Israel and Ukraine. Through her position on the House Permanent Select Committee on Intelligence (HPSCI), she has received classified briefings on sanctions evasion networks and proliferation threats from countries like Iran and North Korea. Despite this national security background, Stefanik is best known for her domestic political role as House Republican Conference Chair and her transition from moderate Republican to Trump ally. This evolution is particularly evident in her stance on Ukraine – shifting from strong support for NATO membership and military aid in 2022 to recent skepticism of continued US support.

During Trump’s first term, UN Ambassador Nikki Haley emerged as a leading voice on sanctions policy, especially regarding North Korea and Iran. Haley’s tenure (2017-2019) focused on aggressive maximum pressure campaigns, including pushes for enhanced UN sanctions on North Korea. Her successor, Kelly Craft (2019-2021), maintained this hawkish approach but emphasized China and Iran, though with less success in advancing multilateral sanctions policy.

Stefanik’s public statements suggest an even more confrontational approach than her predecessors, including toward international institutions themselves. While Haley worked within the UN system to build consensus for US sanctions priorities, Stefanik advocates leveraging US funding to force institutional reforms and supports sanctions against international bodies like the International Criminal Court. Her criticism of UN agencies and calls to reassess UN funding indicate she may prioritize institutional pressure over traditional coalition-building.

A significant but less obvious implication of Stefanik’s nomination concerns the technical aspects of sanctions implementation. The UN ambassador traditionally plays a vital behind-the-scenes role in negotiating the technical details of sanctions resolutions, collaborating with Treasury and State Department experts to ensure measures are legally sound and enforceable. Given Stefanik’s apparent preference for broad institutional pressure over technical diplomacy, combined with her limited sanctions law experience, this dynamic may shift. The result could be an expanded Treasury role in technical negotiations while the UN mission focuses more on public pressure campaigns.

Key Implications: A reduced emphasis on institutional diplomacy at the UN could lead to less predictable multilateral sanctions regimes, with greater divergence between US and international partners. This would increase compliance complexity for companies operating in multiple jurisdictions.

Forward Outlook: We expect more unilateral US actions with less emphasis on consensus-building. Increased friction between US and multilateral institutions may ultimately lead to divergent compliance requirements, and decrease coordination between regulators in the US and Europe.

US Congress – Brian Mast and Jim Risch

trump’s foreign policy team and the implications for us sanctions policy |

Congress shapes sanctions policy through multiple channels, with the House Foreign Affairs Committee (HFAC) and Senate Foreign Relations Committee (SFRC) serving as the primary architects of sanctions legislation and oversight. While SFRC’s advice and consent role on nominations gives it unique leverage, HFAC’s oversight authority and legislative initiatives often drive day-to-day implementation of sanctions programs.

Brian Mast and Jim Risch, set to chair HFAC and SFRC respectively, will bring diverging approaches to their roles in the next Congress. Brian Mast, a 44 year-old former Army combat engineer, has served in the House since 2017 and is an ardent supporter of Trump’s America First agenda. Risch meanwhile, is a longstanding Senator and former chairman of the SFRC, who has emphasized oversight of sanctions waivers and licensing decisions.

While both have previously advocated for more aggressive sanctions enforcement, particularly regarding China and Iran, Mast represents a shift from traditional Republican establishment foreign policy. For example, Mast was initially a strong proponent of US support to Ukraine, even being personally sanctioned by the Russian government for his advocacy; however, this support has since cooled.

In general, House Republicans are seen as more closely aligned with President Trump than those in the Senate, and in an administration that values loyalty and strict adherence to Trump’s polices above all else, bipartisanship and compromise will be harder to find, particularly on thorny questions such as negotiating with Russia.

The situation in Congress today presents a distinctly different environment than Trump’s first term, when then-SFRC chairman Bob Corker and HFAC chairman Ed Royce were frequent challengers of administration policies. Mast has explicitly stated that US foreign policy will be defined by Trump and incoming Secretary of State Marco Rubio, saying “we will certainly work to create the right pathways to support that foreign policy.” While he maintains that bipartisanship isn’t an end in itself, noting that “the goal is what we’re doing for our country and hopefully that’s bipartisan,” his alignment with the incoming administration’s priorities is clear.

Given their respective track records, complex programs targeting major adversaries like Cina and Iran could see a larger role played by Congress in the years ahead. Expect more systematic and aggressive calls for sanctions enforcement across agencies.

Key Implications: Strong alignment between HFAC leadership and the White House could lead to increased focus by Congress on enforcement actions, with the goal of helping to achieve a swift implementation of Trump’s “America First” agenda.

Forward Outlook: We expect Congress to push for more frequent and detailed reporting requirements from both agencies and private sector entities involved in sanctions compliance. Expect particular focus on technology transfer restrictions and supply chain scrutiny, especially in contexts where regional policies might affect great power competition.

 

 

Banner image: Photo by Kenny Holston-Pool/Getty Images

 

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