Sanctions against Russia could potentially hamper the supply of palladium, a metal used to make a key component in cars. Russia generates a third of the world's supply.

Sanctions against Russia, if not handled properly, could come back to bite American shoppers right in the dealership.

Russia accounts for one-third of the world’s supply of palladium, essential to the manufacture of catalytic converters, a tubular piece of silver-colored metal that the U.S. requires in every gasoline-powered vehicle as a way to reduce emissions. The metal could be caught up in sanctions from the U.S. and other nations over Russian aggression against Ukraine.

“Not only could sanctions make the price go up,” said Chris Blasi, founder of Neptune Global, a precious metals dealer. “More importantly, it could just not be available.”

The U.S. and other nations have yet to detail what sanctions they plan to impose on Russia and there’s been no indication that they’ll put direct restrictions on the nation’s largest exports, like oil, gas, wheat and metal. According to a U.S. State Department spokesperson, the government doesn’t preview sanctions actions, but no option is off the table and consequences will be severe, appropriate and coordinated.

The Biden Administration walks a fine line between clamping down on Russian President Vladimir Putin and avoiding any unintended consequences for Americans. But sanctions could have ripple effects for a global supply chain, already beset by challenges during the pandemic that have made it harder to buy everything from cars to toys to refrigerators.

“Do we want the whole world to suffer along with them?” Blasi said, referring to the Russians. “It would be hard to believe that we would be foolish enough to sanction certain items directly that will cause further problems with the supply chain.”

But even before President Joe Biden started considering sanctions, auto production was roiled. There was a 15% decline in the number of cars manufactured in the first nine months of 2021 compared with the same period in 2019, according to the International Organization of Motor Vehicle Manufacturers. With fewer options at dealerships, many buyers have turned to used cars, pushing prices up by 42% since the pandemic began, with the average used vehicle now selling for $28,205.

The microchip shortage has been a primary culprit. Other materials, like the metals used to make cars — palladium, aluminum and steel — have also been harder than usual to come by. “If you went back 10 years ago, there were warehouses full of the stuff. Today there just isn’t,” said Eoin Dinsmore, a metals analyst at CRU Group, a commodity research firm.

Prices are up, accordingly. For instance, palladium currently costs about $2,300 an ounce, up from $1,400 in 2019 and $800 in 2017. Prices have spiked in recent weeks in anticipation of further sanctions, with the additional costs either being absorbed by the manufacturer or passed along to consumers.

“If you want to sell a $50,000 car, you have no choice but to pay whatever you have to to get the metal,” said Bart Melek, global head of commodity markets strategy at TD Securities.

A notable exception: Tesla and other electric vehicle makers don’t need to worry about getting a car part that regulates emissions.