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The Ukraine Support Tariff: How Europe can support Ukraine and weaken Russia

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  • Hinz, Julian
  • Schularick, Moritz

Abstract

A "Ukraine Support Tariff" on the remaining €57.2 billion in EU-Russia trade could generate €6-16 billion per year at moderate rates of 30-50% (partial equilibrium) and €3-11 billion (general equilibrium) - exceeding the €3 billion from frozen Russian asset interest income. General equilibrium simulations confirm that Europe has asymmetric leverage over Russia: Russia's value added falls 3-4 times more than the EU's, making the tariff sustainable as long-term leverage. Trade diversion to China is modest. Extreme tariff rates (300%+) are counterproductive, as long-run revenue falls to near zero. Economically, we analyse a combined import tariff and export-side levy on remaining EU-Russia trade. Institutionally, the import leg is more straightforward under EU trade law, while the export leg is less straightforward and would likely require a distinct legal route. That asymmetry matters for implementation, but not for the economic logic of the combined proposal.

Suggested Citation

  • Hinz, Julian & Schularick, Moritz, 2026. "The Ukraine Support Tariff: How Europe can support Ukraine and weaken Russia," Open Access Publications from Kiel Institute for the World Economy 341425, Kiel Institute for the World Economy.
    • Handle: RePEc:zbw:ifwkie:341425
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