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U.S. sanctions are losing their bite

Russia's booming stock market and currency, China's second quarter bounce and Nicolás Maduro's ability to hold power in Venezuela this year have all flown directly in the face of conventional wisdom about the power of the U.S. to cajole bad actors on the international stage through sanctions.

Why it matters: As the Trump administration mulls further punitive actions on China, Iran and a growing list of countries, there's growing evidence the U.S. is losing its coercive power.

That's been particularly notable in the case of Russia, which has been delivering solid returns to investors, despite facing U.S. sanctions for years.

  • Russia's stock market is booming this year, near record highs in ruble terms, with investors expecting fresh all-time highs by year-end.
  • Its ruble currency rose to its highest value against the dollar in 10 months last week.
  • Russian GDP is growing and its unemployment rate is near a historic low.

"They're supporting their economy by adjusting who they're trading with and the markets that they're going into," Chris Gaffney, president of world markets at TIAA Bank, tells Axios. "We're seeing some of that with China too, where China is establishing more trade with Europe because of the ongoing trade spat with the U.S."

  • Gaffney says this has also been true of Iran and Venezuela, which were expected to crumble under the weight of U.S. economic sanctions earlier this year.

What to watch: The common thread is China, which has become the top trading partner with many of the world's countries and essentially ignores U.S. sanctions. Russia is in talks with Iran and has deepened its trading relationship with China while it profits from cheap Venezuelan oil imports the rest of the world is barred from receiving.

  • This could color the reaction Trump gets from China, Turkey and Iran at this week's G-20 meetings.

Go deeper: The grand fall of Venezuelan oil