Trump Raises the Stakes: Could Kazakhstan Face Secondary Sanctions?

Donald Trump announced 25% tariffs on Kazakh imports. Then came the threat of 100% duties and potential secondary sanctions targeting Russia’s trade partners. But how realistic are these threats? Is Trump bluffing? And what’s truly at stake? Orda.kz investigates.

Why is Trump targeting Kazakhstan?

Trump’s decision to impose 25% tariffs on Kazakhstan has raised many questions. Just a week ago, The New York Times published an article noting that trade between the U.S. and Kazakhstan is relatively limited, with roughly 90% of Kazakh exports to the U.S. already exempt from tariffs.

Moreover, the U.S. is one of Kazakhstan’s key foreign investors, especially in the oil and gas sector.

Given the growing interest from American investors in Kazakhstan’s rare earths and natural resources, Trump’s tough trade rhetoric seems puzzling.

The new tariffs affect only about 5% of Kazakh exports to the U.S., valued at under $100 million. Oil and uranium are reportedly exempt, unlike copper, which Trump has threatened to tax at 50%.

Trump’s next dramatic statement involved a potential 100% tariff and secondary sanctions on countries trading with Russia — measures he said would be triggered if Russia and Ukraine fail to reach a ceasefire agreement within 50 days. Following these threats, the tenge dropped to a record low against the dollar.

With these drastic moves, the U.S. president may be inadvertently encouraging Kazakhstan to deepen trade ties with China, America’s top global rival. Kazakhstan’s trade volume with China is already ten times greater than with the U.S. 

There are two likely explanations: either Kazakhstan isn’t the real target, and Trump’s focus is on Russia’s larger allies, or Washington is trying to pressure Astana into striking a deal.

Risk Level

Political analyst Eduard Poletayev remains optimistic that Kazakhstan can “slip between the cracks” and avoid secondary sanctions. He also believes the impact of the new tariffs will be minimal.

It’s unlikely this will affect Kazakhstan’s strategic exports. Our main budget-forming resource — oil — is exported not to Russia but to other countries. Russia’s role is limited to the fact that 80% of our oil passes through its territory via the CPC, which is an international consortium that includes American companies, Poletayev explains.

Political scientist Gaziz Abishev shares a similar view, suggesting Kazakhstan has a good chance of coming through this unscathed, mainly because it exports its oil, not Russia’s.

If I understand correctly, the 100% duties refer to all Russian imports and sanctions on buyers of Russian oil. This implies that Russia continues to fund the war through hydrocarbon exports, mainly to India and China. No additional secondary sanctions beyond oil sales have been mentioned. So I don’t think Kazakhstan will be targeted, says Abishev.

However, some suspect the Trump administration is less concerned about oil and more focused on the "gray schemes" used to bypass sanctions, some involving Kazakh firms.

A few of these companies have already faced penalties for questionable dealings. In June, reports surfaced that the U.S. was considering forming a special task force to investigate how sanctions against Russia might be circumvented via Kazakhstan.

Days later, the U.K. also reminded Kazakhstan of its obligation to uphold economic restrictions.

This suggests that any secondary sanctions may not target Kazakhstan as a whole, but rather individual businesses suspected of facilitating trade with Russia.

How Close?

For Kazakhstan, Russia remains a major trading partner. But for Russia, Kazakhstan’s market is far from a top priority. And many other countries face a much higher risk of falling under U.S. secondary sanctions.

Russia’s trade turnover with China is over $600 billion, and with India it was about $130 billion last year. Meanwhile, our total trade turnover with all countries is just over $141 billion. Russia may be one of Kazakhstan’s key trading partners, but Kazakhstan is only somewhere in Russia’s top ten, at best. If companies from China and India end up sanctioned, it could severely disrupt global trade — to the point where it’s unclear who would suffer more, Eduard Poletayev

Kazakhstan exports a wide range of goods to Russia, including rolled metal, ores and concentrates, ferrous metals, and chemical products. However, most of these are not considered dual-use items.

Still, oil analyst Olzhas Baidildinov is concerned about Trump’s actions. He warns that Kazakhstan’s close trade relationship with Russia puts it at significant risk of secondary sanctions.

Higher U.S. import duties or secondary sanctions could very well impact Kazakhstan. We’re one of Russia’s major and consistent trade partners — not large on Russia’s scale, perhaps, but for us it’s a significant volume: around $28–29 billion a year. Naturally, that kind of figure is going to attract attention, Olzhas Baidildinov

There are already ongoing complications in the trade of oil, petroleum products, and gas between Kazakhstan and Russia. Kazakh banks often refuse to process payments on such deals due to their inclusion in European sanctions packages. This pressure is only expected to grow.

Broader economic restrictions against Russia are bound to have a spillover effect on Kazakhstan.

There’s been some optimism about the 25% tariffs, since our raw material exports to the U.S. aren’t subject to them, and the rest amounts to just $200–300 million a year. Most experts believe the consequences will be limited. But I don’t share that optimism. Tariffs impact the investment climate. And if secondary sanctions are applied to Kazakhstan or its oil sector, the effects could be severe — supply shortages, rising prices, and other long-term damage, Olzhas Baidildinov

It’s tempting to speculate about who will be worse off under these new restrictions—Kazakhstan or the U.S. “Try going without our oil and uranium,” some might say. But now is not the time for bravado.

If he wants to, Trump could seriously shake — if not collapse — Kazakhstan's economy.

What’s at Stake for Kazakhstan?

The biggest risk lies in any restrictions on Kazakh oil. Even without direct sanctions on Kazakhstan, further economic hits to Russia could cause sharp swings in global prices. Astana is certainly not interested in that.

But the worst-case scenario would be a direct attack on Kazakhstan’s oil sector.

The most painful blow would be a price cap on our oil. Russia currently faces a $60 per barrel ceiling. Since global prices are already within that range, the EU is pushing for a floating cap, possibly around $47 per barrel. That would significantly hurt Russia’s oil revenues and budget. If a similar ceiling were applied to Kazakh oil, it would benefit U.S. and European companies, who’d pay less tax here and gain a competitive edge by buying cheaper oil for their refineries. This is the most pessimistic forecast. But some form of restriction on trade with Russia is inevitable, Olzhas Baidildinov.

The second major risk is capital flight. If the U.S. widely enforces secondary sanctions, Kazakhstan’s credit ratings could fall, making it harder to attract investment and secure funding.

First, it would damage Kazakhstan’s investment climate. Second, it would cut into our budget revenues, either because our goods enter the U.S. with high duties, or are rerouted to other markets at less favorable terms. Imagine we were assembling iPhones in Kazakhstan using Western technology. Now imagine that iPhone arriving in the U.S. not for $1,000, but $1,250. That product wouldn’t stand a chance in the American market,Olzhas Baidildinov

Another gray area involves so-called tolling schemes, where Kazakhstan receives a portion of transit oil from Russia for processing at the Pavlodar Oil Chemistry Refinery, in exchange for part of its own oil produced in the west of the country.

Will Washington interpret this as an acquisition of Russian energy resources? Will it be willing to make an exception? And what about Russian gasoline, which Kazakhstan continues to import regularly?

Kazakhstan now has an opportunity to demonstrate its diplomatic "multi-vector" approach — convincing the Trump administration that it does not, and will not, maintain compromising ties with Russia.

This is a good test for Kazakhstan’s diplomacy — to show that we deserve to be exempt, that we’re a reliable supplier of energy to global markets, and that we comply with sanctions. The diplomatic corps, and especially Kazakhstan’s embassy in Washington, now has a lot of work ahead. We’ll soon find out whether the Trump administration is actually willing to listen to countries like Kazakhstan, Olzhas Baidildinov

Bluffing?

All this talk of sanctions may simply be diplomatic posturing — a form of pressure, or even political theater.

Trump gave Ukraine and Russia 50 days to negotiate a ceasefire. But it’s unlikely any meaningful agreement will emerge within that timeframe — perhaps not even in several months:

This is, so to speak, a game of raising the stakes, and Trump is the one leading it. In general, sanctions aren’t always effective. However, there’s never been a precedent on this scale. In the past, sanctions were imposed on countries that didn’t have a dominant role in the global economy, even if they were regionally significant, like Iran, not to mention Cuba. But this time, the scale of escalation is far bigger. Even if something does happen, it will likely be limited to half-measures. It won’t lead to anything good, of course—but I believe Kazakhstan’s economy can withstand it,” Eduard Poletayev

Some political analysts suggest that Trump may simply forget his threats — as he’s done before — or that the so-called “50-day pause” is part of backroom dealings between global leaders, meant more as a distraction than a real deadline.

There’s another theory — that this is part of some ‘gentleman’s deal’ between Putin and Trump. Trump essentially gave Putin 50 days: whatever Russia manages to seize in its summer offensive, that’s what it keeps. After that, the sides could move toward peace talks, Gaziz Abishev.

The likelihood of actual secondary sanctions against Kazakhstan is considered low. Just this week, Fitch Ratings reaffirmed Kazakhstan’s credit rating, specifically citing the low risk of U.S. sanctions.

Still, maintaining Kazakhstan’s balanced, multi-vector foreign policy — being friendly with all sides — is becoming increasingly difficult in today’s political climate.

Original Author: Nikita Drobny