Reducing trade with Russia: Sanctions vs. firms’ voluntary suspension of activities

The invasion of Ukraine in February 2022 led to large and unprecedented sanctions against Russia. In parallel, many multinational firms voluntarily decided to suspend their activities in Russia. Using Spanish firm-level data, this paper quantifies the impact of trade sanctions and firms’ voluntary decisions to suspend activities on exports and imports with Russia. We find that firms’ voluntary decisions to suspend activities in Russia contributed to the reduction in exports and imports by 20% and 24%, respectively, while sanctions contributed by 10% and 34%, respectively. The results show that the combination of sanctions and firms’ voluntary suspension of activities caused a much greater reduction in trade with Russia than sanctions alone would have achieved.