When we hear about economic sanctions (like this one), we often think of them as a necessary tool used by the United States and other countries to hold nations accountable for their actions. However, what we don’t often consider is the negative impact these sanctions can have on American small manufacturers. In this post, though certainly not an exhaustive list, we’ll explore just five shocking ways economic sanctions can hurt these businesses.

1. Limited Market Access:
One of the most significant impacts of economic sanctions on small manufacturers is the limitation of market access. When sanctions are imposed, it often means that certain countries are off-limits for trade. For small manufacturers who rely on exporting their products, this can be a significant blow. They may lose access to key markets, which can result in lost revenue and even the potential for business closure.

2. Increased Costs:
Economic sanctions can also lead to increased costs for small manufacturers. When trade with certain countries is restricted, it can result in a shortage of raw materials or components needed for production. This can force manufacturers to source these materials from other countries, which may be more expensive especially due to the new supply and demand dynamic created by the sanction. Additionally, the increased bureaucracy and red tape associated with sanctions can also add to the costs of doing business.

3. Currency Fluctuations:
Sanctions can also cause currency fluctuations, which can be detrimental to small manufacturers. When a country is sanctioned, its currency may lose value, which can affect the purchasing power of small manufacturers who do business in that country. Additionally, currency fluctuations can also affect the cost of raw materials and other inputs, which can further increase costs for manufacturers.

4. Damage to Reputation:
Another way economic sanctions can hurt small manufacturers is by damaging their reputation. When a country is sanctioned, there is often a negative perception associated with doing business in that country. This can make it difficult for small manufacturers to establish relationships with suppliers and customers in other countries, as they may be wary of the potential risks involved.

5. Uncertainty and Instability:
Finally, economic sanctions can create a sense of uncertainty and instability for small manufacturers. The constantly changing landscape of international trade can make it difficult for businesses to plan for the future. This can result in a lack of investment and innovation, which can ultimately hinder the growth and success of small manufacturers.

Sometimes these sanctions actually drive businesses to spread their manufacturing processes (and investments) across the globe as opposed to keeping them all within the United States. Occasionally, sanctions will literally make doing business from a distance impossible to sustain and the manufacturer will move entire production plants out of the current country. In these instances the negative effects of the sanction can economically hurt the imposing nation much more than originally anticipated.

While economic sanctions are often seen as a necessary tool for holding nations accountable, it’s important to consider the negative impact they can have on American small manufacturers. From limited market access to increased costs, currency fluctuations, damage to reputation, and uncertainty and instability, the effects can be far-reaching. It’s crucial for policymakers to consider these impacts when deciding whether or not to impose sanctions and to work towards finding alternative solutions that can achieve the desired outcomes without harming small businesses.

It is a good thing that world leaders still value humanity above economics, but sometimes it feels like continuously imposing sanctions is simply delaying the inevitable, albeit heavy, decision to use more impactful persuasion.  But I’m just a entrepreneur trying to make a way for myself and my family…I digress.