As the world’s largest economy, the U.S. has significant clout in the global supply chain that will hit many companies’ logistics, said Alex Capri, a visiting senior fellow at the National University of Singapore’s business school.
That’s likely to create a domino effect down the supply chain in terms of tracing the movement of goods, which will be hard and costly to enforce, with consequences to business operations. The U.S. sanctions are causing “great distress,” according to the international trade scholar.
Capri has over two decades of experience in various trade roles including leading the Asia trade and customs practice at accounting giant KPMG.
Now, those who come into contact with “strategic goods,” as defined by U.S. authorities, will need special licenses.
While such goods are generally understood to be weapons, nuclear and biological materials, that designation can affect a much wider range of products, which is what makes sanctions “so painful,” said Capri.
Broadly, sanctions also cover the trade of “dual use” goods, which refer to products and technologies that can be used by both civilians and the military. They include over 1,000 classes of goods from brake pads to SIM cards, Capri said.
“Once sanctions are in place, dual use goods might require special export licenses or be banned entirely,” he added.
That will impact the entire supply chain from seller to end user.