What it is
Secondary sanctions are extraterritorial measures that extend the reach of a sanctioning country's laws beyond its borders. Unlike primary sanctions, which directly prohibit a country's own citizens and companies from engaging with a sanctioned entity, secondary sanctions threaten penalties against foreign individuals or firms for conducting business with the primary target. This forces third-party actors to choose between doing business with the sanctioning country or with the primary sanctioned entity, effectively cutting off the target from global markets.
Secondary sanctions create complex compliance challenges for international businesses and can significantly disrupt global trade and financial networks. Companies must navigate multiple legal jurisdictions, often leading them to divest from or avoid markets associated with sanctioned entities to prevent being penalized themselves. Retail investors should track news on secondary sanctions, as they can cause broad market uncertainty, impact the profitability of multinational corporations, and lead to supply chain reconfigurations, affecting prices and availability of goods.
Why it matters
Secondary sanctions can force businesses to make difficult choices, disrupting global trade and potentially impacting the profitability of many companies.
Reviewed under editorial standardsUpdated September 26, 2026Not investment advice