Putin’s invasion of Ukraine ‘isn’t going to be painless,’ U.S. Commerce Secretary says

U.S. Commerce Secretary Gina Raimondo joins Yahoo Finance Live to discuss the ramifications of the Russia-Ukraine war on supply chains, sanctions, export controls, and what the Biden administration can do to address the chip shortage.

Video transcript

JULIE HYMAN: Well, as we were just discussing, there were already acute supply chain challenges, even before Russia's invasion of Ukraine. And now with disruptions caused by that conflict as well as sanctions against Russia, well, those issues are becoming even more acute. We are joined now by the Commerce Secretary Gina Raimondo of the United States of course.

Secretary Raimondo, thank you so much for being here. Now the president reportedly, in just about 30 minutes, could be announcing a ban on Russian oil imports here to the United States. I know that's not your direct purview, but if you can comment on it, please do, and give us a bigger picture idea of how the administration is thinking about its approach to Russia at this point.

GINA RAIMONDO: Yes, thank you. Good morning. So as you say, the president is speaking at 10:45, in just a few minutes here. But what I will say is this. President Biden has been crystal clear from the beginning that President Putin's invasion of Ukraine isn't going to be painless for anyone. Putin's blind and immoral aggression, which was unprovoked, has introduced instability into the markets, including global oil markets, global stock markets, and the economy, and that is why we are doing everything that we can, working with our allies, to put as much pressure as we can on Putin to bring this aggression to an end as quickly as possible.

So the president will address oil specifically at 10:45. But the bottom line is when you have someone like Putin, who chooses to make war, as President Biden has said, that produces global instability and some pain for everybody. What we are doing is working with our allies to have the strongest possible financial sanctions that we can have, the strongest possible export controls, which is an area that I am overseeing, and those are intended to maximize pain for Putin in the short term to bring this war to an end as quickly as possible.

JULIE HYMAN: And what is the latest in terms of the export controls impact, and what more can you all be doing on that front? Are there more levers you can pull?

GINA RAIMONDO: Yeah. So I will say that this is unprecedented, what we have done with export controls. Just for your viewers who might not think about export controls every day, so what export controls means is that we are denying the sale of certain goods to Russia. And the reason it's unprecedented is because for the first time ever in America, we are doing it in complete alignment and unison with our allies.

All of the European Union, the UK, Canada, Korea, Australia, a broad, broad, broad group of countries are saying none of us will sell to Russia semiconductors, certain technologies, military equipment, civilian aircraft, engines. It's a very long list designed to deprive Russia of the technology and products that it needs to continue to run its military operation. Now by their nature, these export controls take some time for them to feel the pain, right?

So, for example, it's only a matter of time before Russia will need to repair its aircraft and will not be able to get access to the parts, or engines, or technology it needs to repair the aircraft, to repair the trucks, to repair the tanks, to repair ATM machines if you think about it. So we expect that because of this unprecedented level of cooperation with our allies, in a matter of probably months, not weeks, this will cause significant pain and disruption to Russia's economy and their military operation.

JULIE HYMAN: Is there anything from a trade perspective that can be done that would be more immediate given the Russian damage that is being inflicted on Ukraine today, and yesterday, and probably tomorrow?

GINA RAIMONDO: Yeah. I think that the financial sanctions, which are extreme, on Putin, on all of the oligarchs, on the banks done in cooperation with our allies, they are beginning to have quite a significant effect on Russia, the Russian economy, the Russian stock market, the ruble. And that will intensify, I predict, quite intensively in the days and weeks to come.

JULIE HYMAN: I also want to ask about what you are hearing from US business leaders because, of course, there is not just the trade going that's being now interrupted from here to Russia. It's from Ukraine and Russia to here as well. And I think of things in particular like neon gas, which is produced by Ukraine, used in the production of semiconductors. We already know there was a semiconductor shortage. What are you hearing from business leaders about how the administration can maybe help to cope with these latest shortages and price surges?

GINA RAIMONDO: Yes. It's an excellent question. By the way, I talk to business leaders every day in a normal course. But in light of what's happening, I've really redoubled my outreach efforts, so I'm having numerous conversations daily with business leaders. First of all, there's pretty strong unanimity that President Biden is doing-- is making the right moves. They feel that we are doing the right thing by acting aggressively in concert with our allies and with NATO to condemn what Putin has done and to really bring as much pressure we can to him so he ends the conflict.

Secondarily, they're concerned. I would say there's a pretty high degree of concern. So because of what we said before, I mean, this kind of a war-- we haven't seen a ground invasion in Europe since World War II of the scale we're seeing today. So this sort of a war causes global turmoil. What we are doing, we're doing it every single day literally, is working with the private sector to find alternative sources of these whatever, critical minerals, nickel, palladium, uranium.

The good news is most companies have quite a lot of stockpile, so this isn't an immediate problem. And we are working with them aggressively, using every tool that we have in our toolbox, listening to the business community about how we can be most helpful to help them get ready in the eventuality that this gets worse and is prolonged. And as you say, there's already supply chain challenges, and so we have to-- we're really redoubling our efforts to work in partnership with the business community to minimize the destabilization and disruption.

JULIE HYMAN: And Secretary Raimondo, it's not, of course, just the business community. Of course, it's everyday Americans, of course, as well, particularly I think that the increase in prices of gasoline tends to be-- have the biggest hit on psychology. It seems like from what we've seen in poll numbers, et cetera, most people are willing to put up with an increase for some time. They see it as linked to the effort in Ukraine, but they probably won't be too happy about it forever. Are there any further-- is there anything further the administration is focusing on to try to reduce the hit from the inflation that we've been seeing?

GINA RAIMONDO: Yeah. So as we said in the beginning, the president will be addressing that specifically in just a few minutes, so I'll let him. I don't want to get ahead of that. But, again, President Putin's war, his unprovoked war, invasion of Ukraine, isn't going to be painless for anyone. It's going to have-- it is having global ramifications, which is why President Biden is really leading the world in getting countries all around the world to bring as much pressure as we can to Putin so that this ends as quickly as possible.

JULIE HYMAN: You are set to meet with business leaders tomorrow, I believe. And not just this. I'm sure that this will be a topic of conversation, what's going on right now in Russia and Ukraine, but also just the efforts that were already underway before this to focus on innovation and competition here in the United States. What's going to be the focus of that meeting, and what do you want business leaders to take away from it?

GINA RAIMONDO: Yes. So that's right. Tomorrow the president and I will be meeting with a group of business leaders and a bipartisan group mainly to focus on semiconductors, and chips, and how we can continue to alleviate the shortage of chips for American business but also how we can work with the private sector and states to increase the domestic production of semiconductor chips. So this is really about long-- enhancing long-term American competitiveness.

Now as you say, I expect Ukraine and the short-term inflation will come up. I will say the president is very clear, and he has been clear with me, we need to continue to engage with the business community, listen to them, partner with them so that in the short run and in the long run, we can increase supply of goods, bring down costs, but, very importantly, invest in American long-term competitiveness. You heard the president last week in his State of the Union. The best way to bring down prices and enhance our competitiveness and our national security is to make more of these critical goods on our shores in America, and that will be the discussion tomorrow, which is how do we do that?

JULIE HYMAN: And something else that you've also talked about and I wanted to bring up especially, given that it's International Women's Day, is how America can be more competitive in terms of its sort of social policies, right, particularly policies pertaining to women and child care since we have not seen a full return of women to the workforce following the pandemic. President Biden has had a tough time getting anything through on this front through Congress. What's the prognosis at this point?

GINA RAIMONDO: Stick with it until Congress does the right thing and funds these initiatives. Happy International Women's Day by the way. Look, these aren't really social programs. I know that often people refer to them as social programs. The reality is if you want a vibrant American economy that is as productive as possible, that increases the supply and productivity of goods, and that allows us to compete with the rest of the world, then we need women to fully participate in that workforce. And the only way that's going to happen is if we do what most industrial countries already do, which is to provide affordable, reliable childcare, to provide every four and five-year-old American child public pre-K.

These aren't social programs. These go to the core of our economic competitiveness. They go to the core of getting the millions of women who dropped out of the workforce back into the workforce so that we, as a country, can compete with the rest of the world. So the president has an agenda. It is an agenda that is good for the economy, good for productivity, reduces costs, whether that's prescription drug costs or semiconductor costs.

And we're just going to keep making the case to Congress. As you say, it hasn't been easy, but nothing worth going for is easy. And we're going to stick with it.

JULIE HYMAN: Happy International Women's Day to you as well, Secretary Raimondo, and thank you for being here. Gina Raimondo, the Commerce Secretary of the United States. And as the Secretary mentioned, we're going to be hearing from President Biden in just a bit. Thank you again. Appreciate it.