The United States has used embargoes for both economic and strategic purposes. An example of the former was the prohibition of gold bullion exports in 1933, while the latter is seen in the embargo placed on certain war materials in 1940. An embargo may also be used as a political device. Thus, in 1912 the president was empowered to forbid the export of munitions to Latin America. The Neutrality Act of 1936 gave the president a similar power with regard to warring nations anywhere.
Embargoes were authorized as a form of sanction by the Covenant of the League of Nations, and were applied against Paraguay in 1934 in the Chaco dispute (see Gran Chaco) with Bolivia, and against Italy for its invasion of Ethiopia (1935-36). Article 41 of the United Nations Charter permits embargoes in cases of military aggression, and during the Korean War, the United Nations called upon its members to refrain from sending arms and strategic materials to territory controlled by the North Koreans and Chinese.
In 1960, the United States imposed an embargo of all goods, excluding food and medicine, on Cuba, and in 1962 the Organization of American States, amid great controversy, established its own Cuban trade embargo (since abandoned). Since the 1970s, economic sanctions of this sort have increasingly been used by the United States and the United Nations against nations that disturb peaceful relations, such as Iraq (imposed in 1990; exemption to sell oil in order to buy food and medicine granted in 1996) or Yugoslavia (imposed in 1992; eased in 1995 with removal tied to compliance with the Dayton Accords; new embargoes imposed by NATO during the Kosovo crisis in 1999); or against nations that have maintained white minority governments, such as Rhodesia (in the 1970s) or South Africa (in the 1980s).
In international commerce and politics, an embargo is the prohibition of commerce (division of trade) and trade with a certain country, in order to isolate it and to put its government into a difficult internal situation, given that the effects of the embargo are often able to make its economy suffer from the initiative.
The embargo is usually used as a political punishment for some previous disagreed policies or acts, but its economic nature frequently raises doubts about the real interests that the prohibition serves.
One of the most comprehensive attempts at an embargo happened during the Napoleonic Wars. In an attempt to cripple the United Kingdom economically, the Continental System- which forbade European nations from trading with the UK- was created. In practice it was not completely enforceable and was as harmful if not more so to the nations involved than to the British.
Although the law of the United States does not prohibit participation in an embargo it does prohibit participation in a secondary embargo. This occurs when one country pressures a business to stop doing business with a third country over issues with which the business is not directly involved. Not only is an American business required not to participate in a secondary embargo, but is also required to report all attempts to get a business to participate in a secondary embargo. The situation which led to these laws are attempts by Arab countries to prevent American companies from doing business with Israel and Iraq.