As we approach the third year of fighting in Ukraine, America is debating whether to continue sending aid to our allies or stop. Since the start of the war, Congress has passed five bills, providing roughly $175 billion to Ukraine. But how is this affecting the economy?
While funding the Ukrainian war, about 90% of the money spent has remained in America. Defense contractors have invested billions of dollars into new industrial manufacturing facilities, creating thousands of jobs across 38 states, with subcomponents sourced from all 50 states. Additionally, nearly all of the munitions Ukraine relies on are built in the U.S. This includes Guided Multiple Launch Rocket Systems (GMLRS), manufactured in West Virginia, Arkansas, and Texas, as well as medical gear, night vision equipment, and small arms ammunition, all produced domestically.
On the other side of the argument, the money spent on Ukraine comes from hard-earned tax dollars. For some, the idea of allocating these funds and sending them halfway around the world is unsettling, raising concerns about whether the U.S. should continue supporting a non-NATO country.
Another factor in the Ukraine war is trade. Ukraine’s foreign sales fell over 18% from 2022 to 2023 and have been steadily declining since. This drop has strained Ukraine’s economy, making it increasingly reliant on foreign aid and military support. Additionally, disruptions in Ukrainian exports, particularly in agriculture and raw materials, have impacted global markets, contributing to rising food and commodity prices worldwide.
Since COVID, America has faced a semiconductor shortage. While much of the focus has been on production in Asia, Ukraine supplies 90% of the neon, and Russia provides 35% of the palladium used in semiconductor manufacturing. Semiconductors are crucial to many U.S. industries, especially electronics, including cell phones, computers, and medical devices, contributing to rising prices for these products each year.
As the United States determines its position moving forward in the Ukraine war, citizens will be watching closely to see where their tax dollars are allocated.
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