Trade Sanctions

How effective are trade sanctions? We study 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, hand-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 55% decline after the war's onset. Although we document substantial rerouting through third countries, it has not fully offset the direct import losses: total imports of sanctioned products fell by 27% through 2023. Russian firms that had relied on soon-to-be-sanctioned imports experienced a 14% decline in output during the same period, not offset by competing firms or entrants. Similar declines are present 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, export sanctions on Russia have had far-reaching adverse effects.