How Russia’s Invasion of Ukraine Could Affect the U.S. Economy

Russia and Ukraine together are responsible for nearly 30 percent of global wheat exports, while Ukraine alone accounts for more than 15 percent of global corn exports, he said. And many of Ukraine’s growing regions for wheat and corn are near the Russian border.

The rising price of gas and fertilizer, as well as droughts and adverse weather in some regions, like the Dakotas, had already helped to push up the global price of wheat and other commodities. Ukraine is also a significant producer of barley and vegetable oil, which goes into many packaged foods.

“Production might be interrupted, and shipping may be affected as well,” Mr. Bogmans said. If other countries impose sanctions on Russian food items, that could further limit global supplies and inflate prices, he said.

But because food costs make up a small portion of inflation, that may not matter as much to overall price data, Mr. Detmeister at UBS said. It is also hard to guess exactly how import prices would shape up because of the potential for currency movements.

If the conflict drives global uncertainty and causes investors to pour money into dollars, pushing up the value of the currency, it could make United States imports cheaper.

Other trade risks loom. Unrest at the nexus of Europe and Asia could pose a risk for supply chains that have been roiled by the pandemic.

Phil Levy, the chief economist at Flexport, said that Russia and Ukraine were far less linked into global supply chains than China, but that conflict in the area could disrupt flights from Asia to Europe. That could pose a challenge for industries that move products by air, like electronics, fast fashion and even automakers, he said at an event at the National Press Foundation on Feb. 9.

Article source: https://www.nytimes.com/2022/02/23/business/economy/russia-ukraine-global-us-economy.html