Trade Sanctions

Konstantin Egorov, Vasily Korovkin, Alexey Makarin and Dzhamilya Nigmatulina

No 20601, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: How effective are trade sanctions? We examine the economic impact of the unprecedented sanctions imposed on Russia following February 2022, when Western countries banned exports accounting for 36% of Russia's prewar import value. Combining novel, manually collected records of these sanctions with Russian customs data, firm balance sheets, domestic railway shipments, and government procurement contracts, we provide the most comprehensive analysis to date of the economic impact of trade sanctions on a target country. Using a difference-in-differences approach, we find that imports of sanctioned country-product varieties into Russia saw a sharp 62% decline following the war's onset. While we see substantial rerouting through third countries, it has not fully offset the direct import losses: total imports of sanctioned products fell by 27% through 2023. We find that Russian firms that had relied on soon-to-be-sanctioned imports experienced a 14% decline in output during the same period; we also observe similar declines for manufacturing and technology firms, and firms along the military supply chain. Affected firms have also experienced reduced government procurement sales and incurred additional losses when their buyers or suppliers were exposed to sanctions. Overall, our findings suggest that, contrary to widespread claims of ineffectiveness, import sanctions on Russia have had far-reaching adverse effects.

JEL-codes: D22 D74 F14 F51 H56 (search for similar items in EconPapers)
Date: 2025-08
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