The few sanctions that have touched business in those nations have had a negligible effect on the level of trade. Multilateral sanctions can result in a greater loss of national income than unilateral sanctions because they can cut off trade more effectively. Similarly, unilateral sanctions on investment can lead the target countries to seek investors from third-party nations, who then turn to the United States to finance other projects. The effects of sanctions have been small so far, but that does not mean they will not increase in the future. In general, analysts assume that the overall cost that sanctions impose on the U.S. economy will grow along with the volume of trade.
Sanctions are one of several policy options for influencing the behavior of foreign governments.
CBO's analysis does not evaluate the cost of other options, such as military action, or the effectiveness of any of the options. Although it is important for the Congress and the Administration to consider the benefits and costs of various approaches for achieving foreign policy objectives, it is beyond the scope of either CBO's research or this testimony to discuss those alternatives. The federal government uses sanctions on foreign commerce to influence the activities of foreign governments. Sanctions have included restrictions or prohibitions on exports and imports, private foreign investment, foreign assistance, and lending by international financial institutions. The goal of sanctions is to promote particular foreign policies or enhance national security.