Trump's Russia Sanctions Exemption Order: Legal and Contractual Fallout for In-House Teams

What the Executive Order Actually Does

President Trump has signed an executive order directing that Russia be exempted from certain provisions of US sanctions law, a move that reverses years of bipartisan sanctions architecture built up following Russia's actions in Ukraine. The New York Times reported that the order effectively gives the executive branch discretion to waive sanctions obligations that Congress had previously sought to entrench in statute.

This is not a blanket lifting of all Russia-related sanctions. OFAC's underlying regulatory framework, including Specially Designated Nationals list designations and sectoral restrictions, remains in place unless separately revoked. The order creates a layer of executive discretion on top of existing law, which itself introduces legal uncertainty rather than resolving it. For in-house teams, the distinction between what the order permits, what OFAC regulations still prohibit, and what Congress may yet contest is the central compliance question of the coming months.

The Immediate Sanctions Compliance Picture

US companies and their foreign subsidiaries should not treat this order as a green light to resume Russian business without independent legal analysis. OFAC has not issued general licences flowing from the order, and many individual and entity designations on the SDN list remain fully operative. Engaging with a listed counterparty without a specific licence is still a strict-liability offence under the International Emergency Economic Powers Act, regardless of the president's general policy direction.

European subsidiaries of US groups face a further layer of complexity. EU sanctions on Russia, including asset freezes and sectoral restrictions under Council Regulation 833/2014, are entirely unaffected by Washington's executive action. A US parent company operating through a German or French subsidiary cannot rely on this order to authorise transactions that EU law independently prohibits. Multi-jurisdictional compliance programmes must therefore be updated to reflect the divergence between US and EU sanctions posture, which is now wider than at any point since 2022.

Contract Clauses That Need Immediate Review

The sanctions policy shift creates both opportunity and exposure at the contract level. Several categories of clause warrant urgent attention.

Sanctions representations and warranties. Many supply agreements, financing documents, and joint venture contracts contain representations that no party is subject to applicable sanctions or is owned or controlled by a sanctioned person. Where a counterparty's status may now be arguable, those representations need to be reviewed for accuracy and for the consequences of a breach.

Sanctions termination and suspension rights. Contracts entered during the period of maximum sanctions pressure often include rights to terminate or suspend performance if continuing would violate applicable sanctions. Some of those triggers may no longer be satisfied if the US regulatory position softens, potentially removing an exit right that one party was counting on.

Force majeure clauses. Where sanctions were pleaded as a force majeure event to excuse non-performance, that argument becomes significantly harder to sustain if US sanctions obligations are partially lifted. Counterparties relying on force majeure to avoid Russian-related supply commitments should take fresh legal advice immediately.

Governing law and enforcement jurisdiction. Contracts with Russian counterparties that include US or English law governing clauses will need to be assessed against the new policy landscape. English law in particular is unaffected by the US order, and UK sanctions on Russia remain in force in full.

Supply Chain and Trade Term Implications

The practical effect on global supply chains will take time to emerge, but the directional shift is already prompting reassessment of sourcing strategies. Companies that diversified away from Russian commodity inputs, particularly in energy, fertilisers, and metals, after 2022 are now facing questions about whether to consider re-engagement, and on what terms.

Anyone considering new commercial terms with Russian suppliers or intermediaries should build robust sanctions due-diligence obligations directly into the contract. Representations about beneficial ownership, screening against current SDN and EU lists at each transaction, and step-in rights if a counterparty becomes designated are the minimum contractual protections. Relying on the general policy direction of the executive order rather than specific OFAC guidance would be a serious compliance error.

What In-House Counsel Should Do Right Now

The priority actions for legal and compliance teams are concrete and time-sensitive.

First, conduct a rapid audit of all contracts with any Russian nexus, including indirect exposure through third-country intermediaries, and flag those containing sanctions representations, termination rights, or force majeure provisions.

Second, map the jurisdictions in which the company operates and confirm which sanctions regimes, including EU, UK, and UN measures, remain fully operative regardless of the US executive action.

Third, engage with the business on any commercial proposals to re-enter Russian markets or re-engage Russian suppliers, and ensure those proposals are stress-tested against the current OFAC list rather than against the headline policy signal.

Fourth, update contract templates. Standard sanctions clauses drafted in 2022 or 2023 assumed a stable and broadly aligned international sanctions architecture. That assumption no longer holds. Templates should now reflect multi-jurisdictional divergence and include more granular compliance obligations on counterparties.

Finally, monitor OFAC guidance closely. The executive order sets a policy direction, but OFAC general licences, specific licences, and updated FAQs will determine what is actually permissible transaction by transaction. Subscribing to OFAC updates and building a process to cascade those changes to affected contracts is no longer optional.

The Russia sanctions exemption order is a significant political development, but its legal consequences are neither simple nor uniform. The companies best positioned to respond are those that treat the policy shift as a prompt to sharpen their compliance infrastructure, not as permission to relax it.