Double-Edged Sanctions

The thing about national economies is that they are international.

In our interdependent world, no country can reach its full potential by manufacturing, buying, and selling in isolation.

Economic sanctions rely on such interdependence. By tightening screws on an adversary’s economy, it is argued, one can, in a non-militaristic way, apply pressure toward a hoped-for outcome. The problem is, economic sanctions don’t always work, except when it comes to hurting the little guy – the consumer, the average Joe or Ivan. You can bet they will always feel the pinch when food and commodity prices rise.

But Joe and Ivan are not alone. Some American companies may be feeling a squeeze from the continued ratcheting up of sanctions and counter-sanctions between the US and Russia. And while Russia-US trade is far from the most significant area of world economic activity, it is also far from insignificant: publicly listed US companies generated over $90 billion in revenue from Russia last year. And Russia imported $12.5 billion in US products in 2017. Here are a few US companies that may feel a pinch from worsening US-Russian relations.

According to Goldman Sachs, this industrial company which focuses on space, manufacturing and engineering, has an 8 percent sales exposure to Russia.

This less-than-household-name snack foods conglomerate (brands such as Cadbury, Kraft, Milka, Nabisco, Oreo) is based in New Jersey and claims to be the largest
chocolate maker in Russia. 

The world’s largest company saw double-digit growth in Russia last year. Will Russians still buy iPhones if their pockets are pinched?

Few may pity a tobacco company, but it is worth noting that this manufacturing giant has a 7 percent exposure in Russia.

The tech company’s sales in Russia grew by 20 percent last year, well ahead of its growth rate in other emerging market countries.

One of the first companies to do business in Russia, Pepsico had net revenues of $3.23 billion in Russia last year. That represents 5.1 percent of the company’s total net income.

General Motors fled the Russia field, leaving Ford today as the country’s top US carmaker, with a 3.1 percent market share. Compare that to about
8 percent in Europe.