What does the Russian invasion of Ukraine mean for America’s economy?

Even before Russian tanks rolled into Ukraine on Thursday, President Joe Biden warned Americans they would be facing economic upheaval due to the rising conflict.

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While the U.S. does not import much directly from Russia, the invasion could lead to an increase in prices of raw materials that would be passed on to Americans in the form of rising prices on gas, oil, electronics and food items.

Here is how Americans could feel the effects of Russia’s actions in Ukraine.


If Western countries respond to Russia’s invasion by imposing harsh sanctions as they have said they would, Russia could retaliate by cutting back fuel sales which could send prices at the pump higher.

Some believe prices could reach $4 a gallon, according to The Washington Post.

Here is what we know about U.S. gas consumption and prices:

· Gas prices in the U.S. have been on the rise in the past year.

· As of Thursday, the national average gas price in the U.S. is $3.54, according to AAA, up from $2.65 a year ago.

· Russia is the world’s third-largest exporter of oil. Should Russia choose to cut back fuel sales, or if the conflict disrupts the global energy supply, U.S. drivers will see an increase at the pumps.

· Hours after the invasion began, oil prices jumped to above $105 a barrel for the first time since 2014.

· According to the U.S. Energy Information Administration (EIA), America imported an average of 266 million barrels of crude oil per month in the six months ending in November 2021. Just short of half of that number, 132 million barrels, came from Canada. The US imports 8% of that amount from Russia. If the U.S. cannot get that fuel, supplies will be short and prices will go up.

· In an address Tuesday, President Biden warned that sanctions intended to punish Russia would probably affect U.S. consumers.

“Defending freedom will have costs for us as well here at home. We need to be honest about that,” Biden said. “But as we do this, I’m going to take robust action to make sure the pain of our sanctions is targeted at the Russian economy and not ours.”

Stock market

The Dow Jones Industrial Average plunged around 2% at its opening on Thursday, reflecting concerns about the availability of gasoline, electronics and metals.

The invasion has disrupted commodities markets as well. Prices for a number of agricultural commodities went up Thursday. Russia and Ukraine together account for about 20% of global corn exports and 25% of wheat exports.

Here’s what we know about the market in the U.S.:

· Some analysts who spoke to Bloomberg said the volatility in the market is likely to be short-lived.

· Tom Essaye, a former Merrill Lynch trader who founded “The Sevens Report” newsletter, said he doesn’t expect the Russian-Ukraine conflict to dictate market moves in the long or even medium term. Instead, the most important factors “remain Fed tightening and economic growth,” he wrote.

· “As devastating as a major conflict could be between Russia and Ukraine, the truth is stocks likely will be able to withstand the geopolitical struggle,” writes Ryan Detrick, chief market strategist of LPL Financial. “In fact, looking back at other major geopolitical events throughout history reveals stocks usually take them as a nonevent.”

· The effects for most Americans will likely not be that great since only a small portion of the U.S. owns stocks. For those with 401(k) accounts or IRAs in the stock market, you will see a hit to your portfolio. However, it will likely not be a lasting one if you are not taking out retirement funds right now.


Russia is the world’s top wheat exporter and together with Ukraine, account for nearly a third of the global wheat export market.

Disruptions in wheat and other commodities could send global food prices higher. Add supply chain issues and U.S. consumers could see an increase in food costs.

Here’s what we know about the impact on food prices:

· U.S. Secretary of Agriculture Tom Vilsack on Saturday said American wheat farmers will boost production and prevent supply chain problems in the event that a Russian invasion of Ukraine interrupts agricultural exports from Russia and Ukraine.

· Ukraine is also estimated to supply 16% of the world’s corn exports this year. The country harvested nearly 33 million metric tons of wheat last year, the USDA reported.

· “I wouldn’t expect and anticipate that American consumers are necessarily going to see a direct impact, but European consumers, I think that’s a different story,” Vilsack said.


Both Russia and Ukraine are major providers of minerals used for things like electronics, and Russia provides about 10% of global copper reserves and provides nickel and platinum on the global market.

Copper is used in electronics manufacturing as well as in home construction and air conditioning and heating units. Nickel is needed for electric vehicle batteries, among other products.

Should the flow of these minerals be slowed or stopped, the effects would be felt in many goods that US citizens use daily.

What we know about U.S. metal needs:

· Russia produces just under half of the world’s palladium, an element in complex microchips that are used in “everything from electrical meters to sophisticated BMWs,” RSM Chief Economist Joe Brusuelas told The New York Times.

· Russia is also a major producer of aluminum.

· The U.S. chip industry relies on Ukrainian-sourced neon.

· Russia is a major exporter of titanium used in airplanes.

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