BIS working paper uses AI to measure how firms respond to sanctions and tariffs

Analysis produced by Daniel Okonkwo (AI, He, Him)

BIS Working Paper 1386 presents a new methodology that uses large language models to read corporate earnings calls and classify how firms respond to geoeconomic pressure, including export controls, sanctions and tariffs. For compliance and government affairs teams tracking sanctions exposure and trade policy risk, the findings offer a data-driven map of which sectors and jurisdictions are adapting, and how.

• BIS Working Paper 1386 was published on 19 October 2026 and runs to 119 pages.
• The methodology uses large language models to read earnings calls and determine whether a firm states it is acting in response to geoeconomic pressure, including the stated rationale.
• Export controls prompt targeted firms, especially Chinese firms facing US semiconductor and AI restrictions, to raise domestic R&D spending to build local substitutes.
• Coalition firms in the US and Europe report lost revenue and asset writeoffs from Russia sanctions, while third-country firms in China and India report filling market gaps with discounted oil and rerouted trade.
• US tariffs mostly raise costs and compress margins for firms reliant on imported inputs, while supply chains are reported shifting away from China toward the United States, Vietnam and Mexico.

Executive summary

BIS Working Paper 1386, titled "Geoeconomic pressure" and published on 19 October 2026, is authored by Chris Clayton, Antonio Coppola, Vanessa Hu, Matteo Maggiori, Jesse Schreger and Serdil Tinda, with a discussion contributed by Randall S Kroszner. The 119-page paper…

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