How Does the Russia/Ukraine Conflict Affect the United States Economy?

The conflict in Ukraine was at an all-time high in 2015 after Vladimir Putin, Russia’s President, annexed Crimea, a southern Ukrainian peninsula, basically by force because he feared he was losing a foothold in Ukraine. Ukraine acts as a buffer state between the European Union and Russia, so Putin can not afford to lose Ukraine to the EU.

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Tensions in Ukraine between the Ukrainian government and pro-Russian rebels have escalated in eastern Ukraine over the last two months. The day immediately following the election of President Trump, pro-Russian rebels began bombing and occupying government buildings in eastern Ukraine. President Trump’s leniency with Russia is contributing to the fighting In Ukraine.

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Now to comment on how this conflict will affect the United States economy. Many economists believe that because Russia’s military influence has escalated again in Ukraine, European Union nations will place sanctions on trade with Russia and its allies while also aiding Ukraine with proper supplies. However, most nations rely on Russia for petroleum gas, car parts, and technology. These sanctions on trade with Russia and any of its allies because of Russia’s inhuman acts of violence in Ukraine will cause the nations of the EU to look to trade with other nations instead, the biggest one being the United States. The United States economy could benefit from this conflict because nations will be forced to buy American produces products that maybe they would get from the Russian alliance sphere.

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If fighting continues to erupt in Ukraine, look for the United States economy to benefit from trade with EU nations at a much higher rate than before. The only issue that will not allow for economic growth in the United States thanks to this conflict is if the United States decides to intervene a great deal with its own military in the conflict in Ukraine, which would cost enough money to potentially cancel out any gains made from net exports.

 

Michael Laffin

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2 thoughts on “How Does the Russia/Ukraine Conflict Affect the United States Economy?

  1. Victor Matheson

    Good point. The Ukraine is a pretty small economy and shouldn’t really affect the US in any way. However, as the Ukrainian war affects European relations with Russia, its economic importance gets magnified.

    Reply
  2. nickbotta

    Great post Mike! I liked your point about the effect of the conflict on the U.S. economy benefiting due to new EU trade, and it will be interesting to see how this plays out. The benefits on the economy would seem to be more beneficial than the cost of possible intervention in a military and economic sense, so I wonder what the U.S. government will do.

    Reply

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