An Economic Case against a Shift to Russia

with some notes on Friday's deplorable Oval Office meeting

A professional comedian and two amateur clowns met in the White House, and there was nothing funny about it.

President Volodymyr Zelensky of Ukraine stood up for the dignity of the Ukrainian people, who have been courageously fighting Russian military aggression since 2014. In return, his US counterparts, Trump and Vance, tried to stomp their jackboots on his neck. The whole event stunk of a pre-planned ambush, for which Trump and Vance had conspired to publicly embarrass Zelensky and Ukrainians, starting with the inane and clearly planted question about Zelensky’s attire from none other than Marjorie Taylor Greene’s “journalist” boyfriend:

Brian Glenn, of Real America’s Voice: Why don’t you wear a suit? You’re the highest level in this country’s office and you refuse to wear a suit. Do you own a suit? A lot of Americans have problems with you not respecting this office.

Volodymyr Zelensky: I will wear costume after this war will finish. Maybe something like yours, yes. Maybe something better.

I’d like to see Brian Glenn get in a dig like that while speaking Ukrainian or Russian.

If wearing a suit in the Oval Office really is a big deal, then why was there no outcry in the conservative media when Elon wore a hat in the Oval Office, or when his kid wiped a booger on the Resolute Desk?

Trump parroted Putin’s lines, which Zelensky pointed out resignedly in one exchange: “Yes, I heard it from Putin.” But it was Vance who raised the temperature of the sitting, essentially asking Zelensky to get down on his knees and thank our self-anointed Orange King (I guess Zelensky thanking the American people wasn’t enough?) and allow Vance to, without contest, spout misinformation about the history of the war and the involvement of the United States. Zelensky could not very well grovel in front of cameras, in front of Putin, while he is trying to maintain an image of a strong and dedicated leader for his forces. Maybe Vance wanted to ensure the meeting went off the rails?*

I’m not the only one who immediately thought while watching, “This was a setup.” See Chait at The Atlantic, Friedman at the New York Times, and a Bulwark emergency pod. The “setup”/”ambush” accusations were being tossed out all over the place by the liberal normies of Reddit, too. Personally, I suspect there is a minerals deal in the works—it’s just between Trump and Putin, and not the US and Ukraine. The US/Ukraine minerals deal was not signed on Friday.

The chatter now is that a “deal” can’t happen while Zelensky is still president. After the calamitous exchange, Lindsay Graham remarked “He either needs to resign and send somebody over that we can do business with, or he needs to change.” Of course Graham was wearing a yellow and blue tie while he said it. Forcing Zelensky to step down would be celebrated by the Russians, who, with all of the war-time chaos, will find it much easier to install a Putin-friendly “president” in Kyiv, as they did with Yanukovich (who, by the way, played a huge role in giving Ukraine its reputation for corruption). Even Zelensky’s future political opponents agree that this is no time for a Ukrainian presidential election.

Peter Baker of the New York Times phrased it well in this week’s edition of Washington Week: “The people who have been agitating for change in leadership in Ukraine are in Moscow. This has been the Russian line for awhile now, and Trump has adopted it.”

Why is Zelensky so focused on getting real security agreements and not just a ceasefire-on-paper? Because Russia has consistently, frequently, violated security and ceasefire agreements since Ukrainians voted for independence in 1991—with an overwhelming majority, including majorities in Donetsk and Crimea. See my previous post that gives a very brief outline of this history.

Vance claimed that Ukraine is forcing conscripts to the front lines. Well, yes. Ukraine has a mandatory draft, as the US has had many times in history. Rather than having cruel draft policies, Ukraine has actually been under pressure to increase the number of conscripts because they do have manpower issues. Zelensky has been trying very hard to preserve the Ukrainian male youth—even now, the conscription age is only 25. It’s Russia who is sending their 18-year-olds to the front lines.

Let’s clear something else up. There’s been this rumor floating around about “Where is the money?!?” suggesting that the U.S. has given Ukraine money that is now missing. Trump thinks the US gave Ukraine $350B; this number also came up in the Bret Baier interview Zelensky gave later last night. This is false. The U.S. Department of Defense has said that ~$180B has been appropriated for Ukraine (not necessarily delivered); an independent think tank thinks it is less. Much of the US funding is in sending our munitions, and then we pay to replace our own stockpiles. Europe has spent more on Ukraine than the US. Technically, a higher proportion of Europe’s funds are in “loans”, but these loans are either very low interest or are meant to be paid with frozen Russian assets.

Where did Trump get the $350B value that was parroted around yesterday? It seems as if Kirill Dmitriev, the head of the Russian sovereign wealth fund and a delegate to the recent Russia/U.S. talks in Saudi Arabia, planted a figure in the heads of some U.S. delegates that the U.S. has lost ~$300B by giving money to Ukraine and by missing out on Russian investment. Who knows how he came up with that estimate. As I’ll show below, changing our foreign policy goals to partner economically with Russia would not be a great trade. (A lot of the sources quoting the $300B are Russian state media or other unreliable actors, and I won’t link them here. Go ahead and search.)

Meanwhile, Thursday night in Ukraine, Russian drones killed 3 people and injured 20. On Friday, air raid sirens sounded over Kyiv, as if to remind all of the world that Putin’s goal is not Crimea, or Donetsk; it’s the whole of Ukraine.

I encourage everyone to watch the exchange between Zelensky, Trump, and Vance at the White House:

---

The turn to Russia: A poor economic decision

Zelensky noted that despite the oceans protecting the US, we will feel the influence should their war be lost to Russia. Trump brutally berated him for the suggestion.

But Zelensky is only wrong that we “will” feel the influence. We are already being subsumed into the Russian sphere of influence, and that shift in foreign relations is being hurried along by Trump, Vance, and Rubio. The US/Russia meeting in Saudi Arabia was not just about Ukraine. They also discussed future bilateral investment. The official statement on the meetings from the US State Department includes: “We agreed to […] Lay the groundwork for future cooperation on matters of mutual geopolitical interest and historic economic and investment opportunities which will emerge from a successful end to the conflict in Ukraine.”

For Ukraine, the implications of the US’s turn toward Russia are damning, but there could also be severe implications for the US. Pushing away partnerships with the liberal democracies of Europe and Canada in favor of closer ties with Russia would be a very poor trade for Americans. The US economy is not reacting well to all of the “experimentation” being attempted by Trump, like the upcoming 25% tariffs on Europe, Canada, and Mexico. That the U.S. president would so capriciously violate a trade agreement with Canada and Mexico that he himself negotiated spooks any participant in the global economy who relies on the stability of global markets.

The latest Q1 2025 estimate of real GDP from the Federal Reserve Bank of Atlanta, which takes into account the most recent economic data releases, reveals a shocking drop in GDP. That is, we shouldn’t even expect low GDP growth in Q1 of 2025; we should be bracing ourselves for a loss of GDP. If we continue to see inflation (like, an increase in the consumer price index due to tariffs on imported goods), then we all need to buckle up for the dreaded stagflation. (Incidentally, this forecast does not bode well for the hand-wavy economic projections House Republicans used to sell their recent budget resolution. Expect an upcoming post on that.)

(GDPNow documentation here: https://www.atlantafed.org/cqer/research/gdpnow)

And here’s the change in various stock indexes since Trump’s 2025 inauguration, courtesy of the New York Times:

As the Administration’s agenda is more and more realized, the markets are unable to wave the truth away. The US economy is faltering. So, as the US pursues closer ties with Russia and frays economic ties with Europe, Canada, and Mexico, what might we get in return? Who is the better trading and economic partner: Europe or Russia?

I know, it’s almost a silly question to ask, but let’s lay it all out, before we become Russian allies (Musk-ovites?) and so abruptly turn from our long-time liberal democratic partners.

Gross Domestic Product

When thinking about potential trade partners, total GDP can be viewed kind of like a measure of economic power. How much does that nation or that bloc contribute—or have available to contribute—to the global economy? (Data from the IMF World Economic Outlook.)

As you can see, Russia is dwarfed by the EU and the US. France, Germany, and the UK all have a GDP higher than Russia. Russia is simply not that big of a player in the world economy compared to the US, the EU (as a bloc), and China.

Nominal GDP does not account for population size. GDP per capita (this time measured with international dollars to account for differences in purchasing power across countries, a better estimator of standard of living) is another useful indicator of a nation’s economic power. Here again, you can see Russia falls behind the US, EU, and the larger individual European countries.

Trade

The big questions regarding turning to Russia for trade are simply:

• Does Russia export what we need?

• Does the US export goods or services that Russia needs?

The best evidence that the answer to both questions is “no” is that US-Russia trade has been severely curtailed since the full-scale invasion of Ukraine in 2022, and we seem to be dealing with it reasonably well, on the whole. Just look at what SPY has done during that time:

That said, sure, let’s look for opportunity in Russia.

Below is data from the WTO showing the top 10 exporters in 2023 for agricultural products, fuels and mined goods, and manufactured goods. Russia appears only twice in the top 10 for any category: 4th in fuels and mining and 9th in iron and steel. The US is above Russia in each category. Very roughly, this means that we already produce for ourselves more than enough of what Russia exports the most. There are a lot of caveats here—for instance, ”iron and steel” encompasses a lot of different types of products—but it’s pretty clear that we have many other options for what Russia has to offer. Who is at the top of every category? The top two are invariably the European Union, the United States, and China.

The two maps below from the WTO show the top US trade partners in 2022. First is imports—Who do we get our goods from? Second is exports—Who buys our stuff? You’ll note that Russia is not part of these maps. Rather, our trade relationships with Europe, Canada, Mexico, and yes, China, are very robust.

What about services? The US, after all, is a large services exporter. Based on WTO-OECD data, Russia didn’t even crack the top 40 of services trade partners for the US. Could that be because of sanctions? Yes, but not with a large effect. Russia last cracked the top 40 in 2021—just before its 2022 full-scale invasion of Ukraine—and was our 33rd largest services trade partner, at a much lower total services trade volume than with our largest European partners, Canada, and Mexico. Interestingly enough, the US was the second largest services trade partner of Russia in 2023. China was their largest services trade partner. Russia finds more use for our services than we do for theirs, and there are several other importers that we can rely on to purchase our services. Russia is reliant on Chinese services.

Might we be missing out on specific products or services from Russia if we don’t bring them in as a trading parter? Let’s take a look at the 2022 WTO trade profiles for the US and Russia (and China and the EU—the whole book is at the EU link):

In 2022, the US’s top imported agricultural products were (1) alcohol; (2) bread, pastry; (3) coffee; (4) other food preparations; (5) wine. Russia’s top agricultural exports were (1) wheat; (2) sunflower-seed or cotton oil; (3) rape, colza, or mustard oil; (4) barley; (5) chocolate and cocoa. No match.

In 2022, the US’s top exported agricultural products were (1) soy beans; (2) corn; (3) cotton; (4) wheat; (5) nuts. Russia’s top agricultural imports were (1) cheese; (2) palm oil; (3) citrus fruit; (4) soy beans; (5) wine. So, maybe there’s a market for soy beans in Russia. But wait: Russia imported $1,261,000,000 in soy beans in 2022. China imported $61,236,000,000, and the European Union imported $8,808,000,000. So the EU (not even counting the UK) imports 8x the soy of Russia, and Russia’s soy imports are relatively minuscule compared to the rest of the world. The US does not need the Russian soy market.

Let’s do this again for non-agricultural products:

In 2022, the US’s top imported non-agricultural products were (1) crude petroleum; (2) cars; (3) automatic data-processing machines; (4) radio-telephony transmission tools; (5) medication. Russia’s top non-agricultural exports were (1) crude petroleum; (2) petroleum other than crude; (3) coal; (4) gold; (5) semi-finished iron products. Hey! Maybe the US could use Russian crude?! But wait: how’s it going to get here? A pipeline under the Pacific? Expensive tankers? (Maybe—the US supplies oil overseas, as you’ll see below.) The real answer is that the US already has access to plenty of crude petroleum in North America. In fact, as you’ll see below, crude is both a top import and a top export of the US.

In 2022, the US’s top exported non-agricultural products were (1) petroleum other than crude; (2) crude petroleum; (3) petroleum gas; (4) cars; (5) integrated circuits. Russia’s top non-agricultural imports were (1) radio-telephony transmission tools; (2) motor vehicle parts; (3) medications; (4) automatic data-processing machines; (5) cars. Sure, there might be a market for cars in Russia, which we export. Those automatic data-processing machines use integrated circuits, although this high-level analysis doesn’t break down exactly what types, which may or may not be a match with what we produce. Russia imported $7,999,000,000 in cars in 2022. The US exported $57,851,000,000 in cars in 2022. If the US had entirely captured the Russia car market in 2022, it would have been ~14% of what we traded—not insignificant. The most popular cars in Russia in 2022 were Lada, Kia, Hyundai, and Renault, none of which are American brands. So in some theoretical future where we count on Russia to help sustain US car exports, US car manufacturers will have some competition.

(In case you missed it—the US is a HUGE producer of petroleum. For everyone yelling “drill baby drill,” we already are.)

You know who has several trade-matches with the US? Europe. The European Union’s top exports in 2022 included wine, alcohol, prepared food, and medications; all of which ranked high on the US’s import list. The EU’s top imports in 2022 included soy, corn, and various petroleum products; all of which ranked high on the US’s export list. In fact, the the US is actually the largest supplier of petroleum to the EU.

Of course there may be opportunities for American individuals or individual companies to invest in Russia or for growth in a small sector, if relations warmed. But on the scale of the US economy, there’s just no economic need or argument to accede to Russian demands or effectively promote their anti-democratic, anti-human rights, anti-liberal stances. And it would be downright harmful to exchange our strong trading relationship with Europe for a weak one with Russia.

If you’re wondering, “What about rare minerals?” well, yeah, they are kind of an issue, but it’s not at all clear that Russia would be helpful or that access to minerals (or more to the point—Russia processing their minerals instead of us processing ours) would be a good exchange given our other trade needs. Several of our allies are top exporters of rare minerals. The WTO put out an informative report on the state of minerals trade about a year ago: https://www.wto.org/english/blogs_e/data_blog_e/blog_dta_10jan24_e.htm.
Here’s the USGS rare earth minerals 2025 study: https://pubs.usgs.gov/periodicals/mcs2025/mcs2025-rare-earths.pdf
Assuming it doesn’t get DOGE-ed, the USGS operates the National Minerals Information Center, which keeps a careful accounting of global mineral availability. Our faithful federal employees are on top of it.

Demographics

The demographic state of a nation can dictate its future ability for economic growth, and thus its future purchasing power in a global market. Compared to the US and the EU, Russia’s population is flat or declining (IMF).

Population growth in Russia has particularly dropped since the beginning of the 2014 war in Ukraine (a close up provided by World Bank):

For all of the chatter about demographic stagnation in Europe, Russia has it worse.

Corruption

It is difficult to measure corruption. There are few (really, no) universally agreed-upon indicators for comparing levels of corruption across nations. One measure out there is the Corruption Perceptions Index from Transparency International:

What will probably concern prospective US investors the most is that Putin has a history of “nationalizing” foreign companies (a practice he is planning to accelerate), jailing outspoken CEOs, and targeting financial companies that interfere—even accidentally—with corrupt practices (see the case of the Hermitage Fund and Bill Browder). American companies do not want to operate in Russia.

Inequality

Strong trading partners will have large or growing middle classes who will purchase and produce goods and services. Unfortunately, increasing income (and wealth) inequality poses a major concern for economic vitality across the globe. Below are some charts from the World Inequality Database showing the share of total national income for the bottom 50%, and top 10% for Russia, the US, the UK, France, and Germany. (The stars in the legend are an indication of data quality.) Out of these examples, only in Russia does the top 10% receive over 50% of national income. The US, however, is pretty similar to Russia. Based on these charts, we might safely assume that the majority of revenue from trade goes to the wealthiest in all of these nations.

Ties to China

Would we be able to count on Russia as a partner and ally should the need arise for economic sanctions on China, such as in the event of an invasion of Taiwan or a severe cybersecurity/espionage breach? The answer is clear: No.

Russia relies quite heavily on China as a trade partner. In 2023, China was Russia’s top partner in services trade, and China is the second largest recipient of Russian exports (14% of Russian exports):

Russia’s top export is petroleum, and Russia’s energy exports to China have grown quite robust since the start of the war and the end of Russian energy transport through Ukraine to the EU. While it’s true that Europe is also a major importer of Russian energy, European nations have been largely uniform in their support for Ukraine and have made concerted efforts to divest from Russian energy supplies. In addition to buying Russian gas, China also supplies Russia with military technology.

China is the number one source of imported goods for both the US and the European Union and both are reliant on exports to China. If a need ever arose to divest from Chinese goods, it would be difficult to convince any partners—not to mention the American people—without leaning on calls for protecting democracy and liberal individual freedoms. Russia would not be likely to accede to such requests for allyship.

Democracy

Democracy is at least as difficult to measure and compare as corruption. One flawed but still useful index is The Economist’s Democracy Index. Here are the 2024 numbers:

Basically, by transitioning to Russia and away from Europe, we will be leaving those who share our democratic values in favor of partnering with autocrats.

For a more demonstrative look at how democratic a nation is, we can see how leadership has changed since 2000:

United States (President):
George W. Bush (2000); George W. Bush (2004); Barack Obama (2008); Barack Obama (2012); Donald Trump (2016); Joe Biden (2020); Donald Trump (2024).

Russia (President):
Vladimir Putin (2000); Vladimir Putin (2004); Dmitry Medvedev (2008; Putin as Prime Minister); Vladmir Putin (2012); Vladimir Putin (2018); Vladmir Putin (2024).

United Kingdom (Prime Minister):
Tony Blair (1997); Tony Blair (2001); Tony Blair (2005); Gordon Brown (2007); David Cameron (2010); David Cameron (2015); Theresa May (2016); Boris Johnson (2019); Liz Truss (2022); Rishi Sunak (2022); Keir Starmer (2024).

France (President):
Jacques Chirac (1995); Jacques Chirac (2002); Nicholas Sarkozy (2007); François Hollande (2012); Emmanuel Macron (2017), Emmanuel Macron (2022).

Germany (Chancellor):
Gerhard Schröder (1998); Gerhard Schröder (2002); Angela Merkel (2005); Angela Merkel (2009); Angela Merkel (2013); Angela Merkel (2017); Olaf Schultz (2021); Friedrich Merz (2025).

Canada (Prime Minister):
Jean Chrétien (2000); Paul Martin (2003); Paul Martin (2004); Stephen Harper (2006); Stephen Harper (2008); Stephen Harper (2011); Justin Trudeau (2015); Justin Trudeau (2019); Justin Trudeau (2021).

Mexico (President):
Vicente Fox (2000); Felipe Calderón (2006); Enrique Peña Nieto (2012); Andrés Manuel López Obrador (2018); Claudia Sheinbaum (2024).

Ukraine (President):
Leonid Kuchma (1999); Viktor Yushchenko (2004); Viktor Yanukovych (2010); Oleksandr Turchynov (2014; placeholder after ouster of Yanukovych); Petro Poroshenko (2014); Volodymyr Zelenskyy (2019).

It is clear that Russia is the dictatorship. I’ve included Ukraine for the chance to point out that Ukraine does indeed elect its leaders, and leadership has changed as might be expected in a democracy. Ukraine has accepted the fair election of a Russian-backed candidate—Yanukovich—at least until it became clear that Yanukovich was stealing from Ukraine and conspiring with Russia. Many (though not all) of Ukraine’s issues with democracy have stemmed from Russian interference in elections.

Takeaway:

We do not have to accept Russia as an economic partner. We do not need them.

If we penalize imports from the EU and other partners while courting Russian investment, we can expect less trade activity, less total economic activity, and less economic growth. It will be more expensive to import the goods we actually need and more difficult to export the goods and services we have to offer. We can expect corruption in any economic activity involving Russia, with the most financial benefits going to the wealthiest Russians and Americans. Americans have grown used to consistent economic growth. Under Trump, his acolytes, and his foreign autocratic conspirators, we can expect a much darker economic future.

---

*Final takeaway: There has been a lot of talk about Musk, in addition to Trump, in the first few weeks of this presidency. I hope this debacle with Zelensky convinces more people that JD Vance is a very, very dangerous man. Vance is an avowed believer in autocracy. (Another topic for another post.) Playing second fiddle to Trump is a tactic; Vance has a strategy and an objective, and if he is allowed to pursue them, he will bring the United States to a very dark place.