As tensions in the region heighten, Australian diplomatic staff have been evacuated from the Ukrainian embassy in Kyiv.
It comes after the US warned a Russian invasion of Ukraine would be imminent.
Mr Tehan said he hoped the situation in Ukraine would resolve peacefully, but measures would be enacted should Russia invade.
"It is highly likely there would be very strong sanctions against Russia and we'll have to play our part in that regard," he told Sky News.
"We want a de-escalation, but if (invasion) happens, then you'll be looking at sanctions and we'll be a part of that."
Mr Tehan said an invasion would also likely lead to an increase in oil and gas prices and put pressure on international markets.
Treasurer Josh Frydenberg said the situation in Ukraine had reached a "dangerous juncture".
"It's a very dangerous situation and the reverberations will be felt far and wide if, in fact, the Russians do invade," Mr Frydenberg told the Nine Network.
"You don't amass more than 100,000 troops on a border to check out the views or have a picnic."
Australian diplomatic staff have been directed to a temporary office in Lviv.
Acting deputy secretary national security and international policy Rod Brazier told Senate Estimates the final five remaining staff members had arrived in Lviv, in Ukraine's west, on Sunday.
"(Sunday) morning as a result of the threat to peace and stability in the region the Australian embassy in Kiev was temporarily closed," he said.
"The embassy has set up a facility for operations. This is a temporary move that will be kept under review considering the security situation."
Mr Brazier said 147 Australian citizens, permanent residents and dependants remained in Ukraine.
The federal government has been warning Australians in Ukraine to leave immediately in light of the situation.
Former US ambassador to Ukraine Steven Pifer said there had been a "startling build-up" of Russian forces on the Ukrainian border.
"Washington has made a decision to assume the worst and then try and do everything it can to deter and dissuade the Kremlin from making a decision that would be a tragedy for Ukraine, but also a tragedy for Russia," he told ABC radio.
US President Joe Biden and Russian President Vladimir Putin held crisis talks on Ukraine on Sunday.
Russia was warned during the meeting there would be "swift and severe costs" should an invasion happen.
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