Table of Contents
Table of Contents

How Economic Sanctions Work

Economic sanctions are penalties levied against a country, its officials, or private citizens to provide disincentives for the targeted policies and actions. Economic sanctions include travel bans, export restrictions, trade embargoes, and asset seizures.

Economic sanctions are viewed as a policy tool short of military force. They're widely applicable beyond the sanctioning country's borders and can be costly to their targets amid increased global trade and economic interdependence.

Key Takeaways

  • Economic sanctions include travel bans, export restrictions, trade embargoes, and asset seizures.
  • Sanctions can be imposed unilaterally by a single country or multilaterally by a group of countries or an international organization.
  • The penalties can be levied against a country, its officials, or private citizens.


Types of Sanctions

  • Embargoes are a broad ban on trading with a country but may allow for exceptions for food and medicines on humanitarian grounds.
  • Export restrictions bar specified products, services, and intellectual property to targeted countries, such as weapons and technology with military applications.
  • Capital controls restrict investment in targeted countries or industries or broadly bar access to international capital markets.
  • Trade sanctions can include import controls for specific countries, regions, or industries.
  • Assets within sanctioning jurisdictions can be seized or frozen, preventing their sale or withdrawal.
  • Officials, private citizens, and immediate family members may be denied travel access to sanctioning jurisdictions.  

Cuba, Iran, and North Korea have been subject to U.S. trade embargoes.

Sanctions Examples 

Economic sanctions against apartheid-era South Africa were often credited as a contributing factor in the peaceful transition to majority rule there. In 2021, economic sanctions included restrictions on U.S. imports from China's Xinjiang region imposed for human rights abuses committed against Uighurs.

The U.S. and the European Union imposed sanctions against Russian officials, industries, and companies following Russia's annexation of Crimea in 2014 and again in 2022 when Russia launched a full-scale invasion of Ukraine.

Who Administers Sanctions Used by the United States?

The Office of Foreign Assets Control, part of the U.S. Department of the Treasury, administers different sanctions programs, including blocking assets and trade restrictions.

What Are Specially Designated Nationals?

Individuals and companies referred to as "Specially Designated Nationals" or "SDNs" are blocked by OFAC, and individuals in the United States are prohibited from dealing with them. 

What Are the Most Common Reasons for U.S. Sanctions?

The U.S. tends to sanction countries that violate human rights or sponsor terrorism.

The Bottom Line

The success of sanctions can be measured by the desired policy goals or their cost to the targeted countries and individuals. They can also impose costs on the targeted country's citizens and the sanctioning country's companies.

Article Sources
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  1. U.S. Treasury. "Sanctions Programs and Country Information."

  2. Federal Register. "Expansion of Sanctions Against the Russian Industry Sector Under the Export Administration Regulation (EAR)."

  3. U.S. Department of State. "Cuba Sanctions."

  4. U.S. Department of State. "Iran Sanctions."

  5. U.S. Department of the Treasury. "'North Korea' Press Releases."

  6. United Nations. "Partner in the Struggle Against Apartheid."

  7. U.S. Department of the Treasury. "Treasury Sanctions Chinese Government Officials in Connection with Serious Human Rights Abuse in Xinjiang."

  8. The White House. "Fact Sheet: United States and Allies and Partners Impose Additional Costs on Russia."

  9. European Council. "EU Restrictive Measures in Response to the Crisis in Ukraine."

  10. U.S. Department of the Treasury. "Sanctions Programs and Country Information."

  11. U.S. Department of the Treasury. "Specially Designated Nationals And Blocked Persons List (SDN) Human Readable Lists."

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