Trade Decoupling from Russia
34 Pages Posted: 20 Sep 2022 Last revised: 19 Apr 2023
Date Written: June 20, 2022
We use a general equilibrium trade model to quantify the welfare cost of decoupling from Russia. We find that a doubling of non-tariff barriers imposed by the West on Russian imports and exports of all goods would decrease Russian welfare by 4.8% and would have a relatively small effect on Western welfare. We show that the welfare cost of decoupling is amplified by supply chains and that restrictions on Russian energy, especially oil, matter quantitatively. Finally, we find that welfare losses generated by restrictions actually applied by the West in the aftermath of the 2022 Russian invasion of Ukraine account for around 80% of those obtained in our decoupling scenario.
Keywords: Decoupling, Trade restrictions, Energy, International trade, Global value chains
JEL Classification: F02, F11, F15, F17
Suggested Citation: Suggested Citation