We investigate how firms adjust to the introduction of sudden, unanticipated, and eventually long-lasting economic sanctions. In 2014, Russia introduced sanctions on imports from Europe, which caused an abrupt negative shock to the food production sector in Lithuania. We find that part-time employment is used as the first shock absorber, followed by full-time employment. Investment reacts immediately but also additionally in the later periods if part-time employment adjustments that proxy for the firm's exposure to the permanence of the shock are large. At the same time, firms dampen shock effects by expanding to other export markets. To rationalize this firm behavior, we provide a theoretical mechanism where forward-looking firms face nonconvexities in the labor market along with heterogeneous variable trade costs.