As Russia’s war in Ukraine drags on, fresh analysis suggests the Kremlin’s economy is rapidly approaching collapse. Former U.S. President Donald Trump appears poised to exploit this vulnerability by intensifying economic pressure on Vladimir Putin, combining shortened deadlines with severe sanctions that may ultimately achieve what missiles haven’t forcing Russia to the negotiating table.
Trump’s decision to shorten the peace deadline to just over a week; far less than the original 50-day window reflects his belief that Putin was using the longer period merely to intensify destruction in Ukraine. He’s right. Economic weapons are becoming as powerful as battlefield ones in today’s global power struggle.
Russia’s Economy on the Brink
Despite optimistic narratives from pro-Russian voices, Russia is hurtling toward a severe economic meltdown. According to multiple official and independent sources, the situation is deteriorating fast:
- Official inflation is now above 10% per year, while real inflation the kind felt by everyday Russians is reportedly double that, especially for essential staples like potatoes, which have seen prices triple or quadruple since the war began in February 2022.
- The Russian government’s military spending is swallowing the national budget officially pegged at 40% but likely closer to 50%, leaving little room for education, health, or infrastructure.
- Energy revenues, once the backbone of Russia’s economy, have plunged due to lower global prices and persistent attacks on oil refineries by Ukrainian drones.
- The once-mighty National Wealth Fund, which helped finance Russia’s war effort, has shrunk from $110 billion in early 2022 to just over $30 billion in 2025. Some analysts, like Swedish economist Anders Åslund, believe it will be depleted before year’s end.
Sanctions and Isolation Taking Their Toll
International sanctions have cut Russia off from key technologies, from aircraft components to semiconductor chips. Today, black-market deals with China are keeping the Russian war machine running but at a huge cost.
And the situation could soon become even worse.
A pending Russian Tariff Bill, with 85 bipartisan Senate co-sponsors, proposes 500% tariffs on imports from countries aiding Russia’s war especially China and India, which currently buy over 80% of Russian crude oil exports. The bill could cut off a lifeline and push the economy past a tipping point.
Internal Collapse Is Accelerating
Even Russia’s own officials can no longer hide the decay. Minister for Economic Development Maxim Reshetnikov has warned that the country is teetering on the edge of recession. But the underlying indicators are far more severe:
- Demographic disaster: Russia lost nearly 600,000 people in 2024, with deaths outnumbering births 5 to 3. A projected labor shortage of 11 million people by 2030 looms large.
- Debt crisis: Consumer and commercial debts are at record highs. As defaults surge, three of Russia’s largest banks have already sought government bailouts.
- Industries collapsing: Outside of the defense sector, sectors like coal mining, tourism, and consumer manufacturing are imploding. Over 25% of Russia’s coal companies are reportedly insolvent.
- Tech brain drain: Since February 2022, over 1 million young professionals especially in the tech sector have fled the country, crippling innovation and productivity.
Russia’s civilian industries are being cannibalized to support the military. Factories once making cars and home appliances now manufacture drones and tanks, an inefficient and unsustainable pivot.
Trump’s Economic Strategy: Lessons from Reagan
President Trump’s proposed pressure campaign echoes a successful Cold War strategy. By ramping up economic warfare, the U.S. could force Putin to choose: make peace or face complete economic collapse. This strategy mirrors the one used by President Ronald Reagan, who leveraged economic force to bring the Soviet Union to the brink, eventually pressuring Mikhail Gorbachev into de-escalation.
“Peace only comes through strength,” Reagan once said and Trump seems ready to test that theory again.
If Putin refuses Trump’s 10–12 day peace ultimatum, signing the Russian Tariff Bill into law could become the most decisive move in the conflict yet.
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