The war in Ukraine is impacting Americans most directly in the form of higher gas prices as the cost of oil continues to soar.
But look a little deeper and the situation becomes even worse.
Russia is a key global supplier of a variety of metals used in manufacturing — aluminum, nickel, palladium. Those metals are now in short supply, and prices for many consumer goods will reflect higher production costs.
The price of nickel on the London Metal Exchange skyrocketed Monday by more than 60%.
Nickel is used to make stainless steel, lithium-ion batteries and other goods. This means the cost of everything from cookware to consumer electronics may be about to climb.
“Commodity markets are increasingly pricing in a scenario under which a significant portion of Russian supply will be excluded from the market,” Morgan Stanley said in a note to clients.
“Prices are likely to remain highly volatile, until the real supply impact becomes clearer and prices can start to settle at a new equilibrium.”
Record aluminum prices already have contributed to higher prices for canned goods. Copper also is at record highs.
The rising costs illustrate the realities of global supply chains and the interdependent nature of manufacturing. Higher expenses for one component of a product can drive up overall prices.
“Already tight markets could see even larger shortages if Russia’s mined commodity exports were to be significantly affected,” Morgan Stanley said.
“Against a backdrop of generally low inventories, demand destruction would become necessary under such a scenario.”
That’s a fancy way of saying manufacturers may need to figure out alternative supplies on a permanent basis.
Bottom line: From an economic perspective, war is now more expensive than ever before following decades of peaceful manufacturing integration.
That means you’ll feel the effects of the hostilities no matter where you live.