Assessing the Cost to the U.S. Economy of Trade Sanctions Against the U.S.S.R.

This chapter presents the US experience with export controls, centering on the period since 1978, to set the context of our analysis. It discusses the domestic impact of export controls in general terms, isolating the factors which contribute to domestic losses and the factors which mitigate those losses. The chapter describes the costs that controls have imposed on specific sectors of the economy, including agriculture, oil and gas equipment, high technology equipment, and others. Neither, though, should we overestimate the ability of the economy to adjust quickly to external shocks, including trade sanctions. Although export restrictions undoubtedly reduce the level of US exports to the Soviet Union and other target countries, their effect on the overall level of US exports is dampened in a number of ways. The chapter explores the questions under four headings: exports and the balance of payments, employment, the allocation of resources, and the distribution of income.