A “sender” country tries to inflict costs on its target in two main ways: (1) with trade sanctions that limit the target country’s exports or restrict its imports, and (2) with financial sanctions that impede finance (including reducing aid). Governments that impose limits on target countries’ exports intend to reduce its foreign sales and deprive it of foreign exchange. Governments impose limits on their own exports to deny critical goods to the target country. If the sender country exports a large percentage of world output, this may also cause the target to pay higher prices for substitute imports, but only if the sender country also reduces its overall output. When governments impose financial sanctions by interrupting commercial finance or by slashing government loans to the target country’s government, they intend to cause the target country to pay higher interest rates and to scare away alternative creditors. When a poor country is the target, the government imposing the sanction can use the subsidy component of official financing or other development assistance to gain further leverage.