Russia‑Ukraine Ramifications: Not All Trade Is Created Equal

Whenever motorists pump gas these days, they get a painful reminder of Russia’s role in global oil markets. What’s been less appreciated is the range of raw and semi-finished products that Russia and Ukraine export. From palladium to wheat, disruptions are already putting upward pressure on prices across a range of everyday products, heightening macroeconomic and market risks over the coming quarters.

At first glance, Russia and Ukraine shouldn’t matter that much to global economic activity. Ukraine’s share of global exports is just 0.3%, while Russia’s is 1.9%. In contrast, China and the U.S. each make up roughly 10% of global trade.

Yet it’s a dramatically different story when it comes to key industrial inputs. As the graph shows, Ukraine and Russia are major exporters of palladium, nickel, grains, and other resources that are critical to a variety of goods and industries – from cars to semiconductors to groceries.


Consider palladium, a chemical element and rare precious metal with a silver-white appearance. Russia produces more than a third of the world’s palladium, much of it for export. In addition to jewelry and dentistry, palladium is used to make catalytic converters that reduce pollution in exhaust from internal combustion engines. They’re mandatory in many countries. So automobile production – already slowed by pandemic- and supply-chain-related shortages of semiconductors – faces further disruption.

Palladium is just one example. Other key manufacturing inputs include fertilizer for agriculture, neon gas for semiconductors, nickel for steel, and ammonia for plastics.