Sanctions, Weaponized Interdependence, and International Trade: Evaluating the Economic Fallout on Everyday Consumers

Abstract

Background: Economic sanctions and tariff-based statecraft have become the default instruments of twenty-first-century geopolitical competition, a shift theorised as the ‘weaponization of interdependence’ — the exploitation of asymmetric chokepoints in global financial, informational, and trade networks by states occupying structurally privileged positions.^[1,2]

Objective: This paper evaluates the transmission of sanctions- and tariff-related shocks from the level of geopolitical intent to the level of household budgets, asking who actually absorbs the cost of coercive economic statecraft.

Methods: The paper synthesises quantitative and qualitative evidence from peer-reviewed economics and public-health literature, official statistical agencies (Eurostat, FAO, IMF, Rosstat), and policy-research institutions (Peterson Institute, CSIS, NBER, CEPR), using four illustrative cases: the 2022 sanctions regime against the Russian Federation, the 2018–2019 United States–China tariff war, unilateral sanctions on Iran and Venezuela, and the Ukraine-war-induced global food and energy price shock.

Results: Across all four cases the evidence indicates that a substantial share of the economic burden of sanctions and tariffs is displaced onto consumers rather than absorbed by targeted elites or governments. Russian online retail prices rose by an estimated 11.7 percentage points in categories directly exposed to sanctions^[11], U.S. households bore close to the entirety of the 2018–2019 tariff incidence at an estimated $1.4 billion in monthly real-income losses^[18], and humanitarian-focused studies of Iran and Venezuela document measurable deteriorations in health and mortality outcomes among civilian populations who had no decision-making role in the disputes that triggered sanctions^[27,29]. The Ukraine war simultaneously pushed the FAO Food Price Index to an all-time high of 159.7 points in March 2022^[40], illustrating how weaponized interdependence generates diffuse, transnational consumer costs well beyond the sender-target dyad.

Conclusion: Weaponized interdependence is analytically powerful for explaining why states reach for economic coercion, but it under-specifies the welfare economics of who pays. The paper argues for integrating consumer-welfare accounting into sanctions design, more rigorous humanitarian carve-outs, and multilateral coordination to reduce collateral inflation, ahead of further escalatory use of chokepoint-based coercion.