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

Julian Hinz and Moritz Schularick

Open Access Publications from Kiel Institute for the World Economy from Kiel Institute for the World Economy

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.

Keywords: Ukraine Support Tariff; EU-Russia Trade; Tariff Revenue; Laffer Curve; General Equilibrium; Ukraine-Unterstützungszoll; EU-Russland-Handel; Zolleinnahmen; Laffer-Kurve; Allgemeines Gleichgewicht (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkie:341425

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