trade

U.S.-Russian trade relationship? There really isn't one

March 18, 2014: 11:28 AM ET

Russia and the U.S. are free to antagonize each other because they have very little to lose economically from deteriorated relations.

Russian President Vladimir Putin

Russian President Vladimir Putin

FORTUNE -- It's the economies, stupid.

Russian President Vladimir Putin signed legislation officially annexing Crimea on Tuesday, in blatant disregard of threats of economic sanctions that President Barack Obama announced over the weekend. And while some have considered the events in Ukraine the result of geopolitical posturing (Arizona Senator John McCain, for instance, has blamed Russia's actions on the Obama administration's "disturbing lack of realism" on foreign policy.), economics and trade offer a much clearer view of the situation.

MORE: Russia's laughable economic threats against the U.S.

Put simply, Russia and the U.S. are free to antagonize each other because they have very little to lose economically from deteriorated relations. According to analysis from Carl Weinberg of High Frequency Economics, trade ties between the U.S. and Russia are minuscule:

U.S. goods exports to Russia totaled just $11 billion in 2013, equivalent to less than 0.1% of U.S. GDP. U.S. goods imports from Russia totaled $27 billion, just under 0.2% of U.S. GDP.

The direct financial linkages between the United States and Russia are also small. According to [the Treasury Department] Russians hold $139 billion in U.S. Treasury securities and virtually no U.S. corporate bonds or equities -- at least directly. Russian direct investment in the United States also appears minimal. In the other direction, U.S. residents hold $70 billion in long-term securities and $14 billion in direct investment in Russia.

Meanwhile, the European Union is far more reliant on Russia for its economic health, as much of the E.U.'s supply of natural gas comes from Russian gas fields. This may explain why the E.U. has been less forceful than the U.S. in its sanctions announced this weekend.

By contrast, take a look at the United States' economic relationship with China. Unlike Russia, China is a very lucrative source for U.S. exports -- it constitutes a $300 billion market for U.S. firms if you combine both exports and sales in China by firms with U.S. investment, according to the Congressional Research Service. Total trade between China and the U.S. reached more than half a trillion dollars in 2013, a significant chunk of both countries' total economic output.

These statistics also help explain why China -- which often sides with Russia on questions brought to the United Nations Security Council -- abstained from a vote to condemn Russia's actions in Eastern Europe.

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