by Patrick Fearon-Hernandez, CFA | PDF
In the last two decades, the United States has dramatically increased its use of international economic and financial sanctions to stop or deter behaviors at odds with US national security or foreign policy. The Treasury Department has estimated that the US had such sanctions on over 9,400 individuals, entities, and countries as of 2021, and that number has surely grown since then.
In the new Trump administration, it appears that tariffs and other trade measures may be the preferred tools of power, but we still think US investors should keep an eye on the risks they face if their stock or bond holdings become subject to sanctions by the US or some other country. In this report, we describe the key types of sanctions, identify which sanctions may be most problematic for US investors, and discuss the challenges in predicting whether sanctions might be imposed against a particular country, entity, or individual. To wrap up, we provide a sample tool to keep track of sanctions risks and discuss the implications for investment strategy.