US Businesses Feel Bite in Response to Russian Sanctions

Despite the limited nature of the economic sanctions President Obama has imposed on Russia, some US businesses say they are already feeling a backlash.

In Temecula, California Roy Paulson, CEO of Paulson Manufacturing, says he has already lost business from his Russian distributors after the US reacted to Russia’s annexation of Crimea, formerly Ukrainian territory.

“I’m feeling a cold freeze in our relationship with businesses in Russia,” said Paulson.

Paulson produces protective face shields for commercial and public safety use. He says he has not received a customer request for an order price in several weeks from his Russian distributor.  Under ordinary circumstances he would usually be handling three or four orders simultaneously.

Obama’s sanctions so far include blacklisting and freezing the assets of 20 important Russian officials. The President has hinted that the sanctions could be intensified, perhaps taking steps against specifically named Russian industries.

According to Eswar Prasad, a professor of trade policy at Cornell University, severe trade restrictions are unlikely to be imposed by Obama. He does say that US organizations like the Export-Import Bank might feel pressure to limit loan guarantees to companies who are either looking to expand into new Russian markets or to sell their for the first time.

US sales to Russia are valued at about $11.2 billion, as of last year. That represents only 0.5 percent of total US exports, but that is already double what they were in 2010.

Other companies that say they have been negatively affected by the backlash to the sanctions are Dallas-based International Chem-Crete Company, which manufactures a product that prevents airport runways from freezing, and New Orleans-based Louisiana Caviar Company, whose business to Russia stopped months ago as tensions between Ukraine and Russia rose.

“I just saw it as anti-American sentiment,” says company owner John Burke.

James Cannon

About James Cannon

James Cannon is an experienced hedge fund analyst. He has served on the advisory boards for various different Fortune 500 companies as well as serving as an adjunct professor of finance. James Cannon has written for a variety of Financial Magazines both on and off line. Contact James at james[at]businessdistrict.com