For over six decades, the US embargo on Cuba has been one of the longest-standing trade restrictions in modern history, shaping Cuba’s economic trajectory and influencing its position in global markets. Initially imposed in 1960 following Fidel Castro’s nationalization of US-owned businesses in Cuba, the embargo was expanded under the Trading with the Enemy Act (TWEA) and later reinforced by the Helms-Burton Act of 1996, which restricts US companies and individuals from conducting business with Cuban entities. While the embargo was intended to pressure Cuba into transitioning toward a market economy and democratic governance, it has had far-reaching economic, social, and political consequences for both Cuba and the United States.

By 2024, Cuba’s economy remains heavily restricted, with limited access to global trade, foreign investment, and modern financial services. The embargo has cost the Cuban economy an estimated $150 billion in lost trade and economic activity since its inception, restricting growth in key industries such as agriculture, healthcare, and tourism. Although China, the European Union, and Russia have become major trading partners for Cuba, the island remains highly dependent on state-controlled economic policies and external financial aid.

Meanwhile, US businesses have lost potential opportunities to invest in Cuba’s agriculture, energy, and tourism sectors, despite the island’s proximity to Florida and historical economic ties with the US. While periodic diplomatic efforts, such as President Obama’s 2014 normalization attempts, have sought to ease restrictions, political shifts in Washington have largely maintained the status quo of economic isolation. This case study examines the impact of the US embargo on Cuba’s economic development, the geopolitical consequences of prolonged sanctions, and the debate over whether lifting the embargo could benefit both nations.

The Economic Impact of the Embargo on Cuba

Since the embargo’s full enforcement in 1962, Cuba has faced severe economic constraints, limiting its ability to engage in global trade, attract foreign investment, and modernize industries. The embargo prohibits American companies from exporting goods to Cuba, meaning the island lacks access to advanced technologies, medical equipment, and agricultural supplies. In 2023, Cuba’s GDP was estimated at $107 billion, significantly lower than comparable Caribbean economies with access to open trade markets.

One of the most critical industries affected by the embargo is healthcare. Although Cuba has a strong reputation for medical research and biotechnology, it faces severe shortages of essential medical supplies and pharmaceuticals due to import restrictions. The Cuban government has cited the embargo as a major reason for shortages in antibiotics, cancer treatments, and medical equipment, leading to delayed treatments and reduced healthcare access for millions of citizens.

The agricultural sector has also suffered, as Cuban farmers struggle with outdated machinery, low crop yields, and limited fertilizer supplies. The embargo prevents the sale of American agricultural products to Cuba, forcing the country to import food from distant markets at higher costs. In 2023, over 70% of Cuba’s food was imported, contributing to high food prices and periodic shortages.

Tourism, which represents a significant portion of Cuba’s GDP, has also been constrained by US travel restrictions. While Cuba attracted over 4 million tourists in 2018, the reimposition of Trump-era travel bans in 2019 caused a sharp decline in American visitors, reducing tourism revenue by 30% between 2019 and 2022. Although European and Canadian travelers still visit the island, the absence of US tourists, who typically spend more per visit, has limited Cuba’s ability to maximize tourism revenue.

Despite these economic hardships, Cuba has managed to develop strategic trade partnerships with China, Russia, Venezuela, and the European Union, partially offsetting the embargo’s impact. China remains Cuba’s largest trading partner, accounting for over 30% of Cuban imports, particularly in technology, industrial goods, and medical supplies. However, the reliance on state-backed trade agreements rather than open-market competition has limited Cuba’s long-term economic flexibility.

The Geopolitical Implications of the Embargo

Beyond its economic consequences, the embargo has shaped Cuba’s geopolitical alliances, pushing the island closer to US rivals such as Russia and China. During the Cold War, Cuba’s economic dependence on the Soviet Union helped sustain its socialist system, but following the Soviet collapse in 1991, Cuba experienced a severe economic downturn known as the Special Period, leading to widespread food shortages and an economic contraction of over 35% between 1990 and 1995.

Since then, Cuba has sought to diversify its trade relationships, strengthening ties with Venezuela under Hugo Chávez and Nicolás Maduro, receiving subsidized oil in exchange for medical services. However, Venezuela’s economic collapse in the 2010s reduced Cuba’s oil supply, forcing the government to implement austerity measures and energy rationing.

The embargo has also influenced US foreign policy in Latin America, with many countries in the region criticizing Washington’s continued economic sanctions. In 2022, the United Nations General Assembly voted 185-2 in favor of ending the US embargo on Cuba, with only the United States and Israel opposing the resolution. Many global leaders argue that the embargo is outdated and counterproductive, as it has failed to achieve its original goal of democratizing Cuba while causing unnecessary economic suffering for the Cuban population.

While some US policymakers support maintaining sanctions as a bargaining tool for human rights and political reforms, others argue that lifting the embargo would allow for economic engagement, democratic influence, and improved diplomatic relations.

Debating the Future of the Embargo

The debate over whether the US should lift the embargo on Cuba remains politically and economically contentious. Supporters of lifting the embargo argue that economic engagement would empower Cuban entrepreneurs, increase trade opportunities, and improve living conditions for ordinary Cubans. The rise of private businesses in Cuba, particularly in tourism, food services, and e-commerce, suggests that market reforms could accelerate if trade restrictions were eased.

From a US business perspective, lifting the embargo could open new markets for American agriculture, energy, and tourism industries. Before the embargo, the US accounted for over 70% of Cuba’s imports, and many American companies have expressed interest in resuming trade ties. For example, Florida’s agricultural industry could benefit significantly from selling food products to Cuba, given the island’s proximity to the US coastline.

However, opponents argue that lifting the embargo without major political reforms in Cuba would reward the Cuban government without ensuring human rights improvements. Some US policymakers insist that Cuba must implement democratic reforms, release political prisoners, and allow greater freedom of speech before economic sanctions are lifted.

Another concern is the role of China and Russia in Cuba’s economy. Critics warn that opening trade without clear regulations could allow Chinese and Russian firms to dominate Cuba’s infrastructure, energy, and telecommunications sectors, reducing potential US economic influence in the region.

As diplomatic relations shift, some incremental steps toward normalization may occur, particularly in areas such as humanitarian aid, agricultural exports, and cultural exchanges. However, whether the embargo will be fully lifted in the near future remains uncertain, as it is deeply tied to US domestic politics and international strategic interests.