Saturday, June 30, 2018

Strategic Supplies

Say what you will about the meeting between Kim and Trump in Singapore, but the general feeling is that we've stepped a little further away from the nuclear abyss. That's not to say that we won't see another round of "my button is bigger than your button" between two notoriously thin-skinned leaders. But at least for the present, and probably through a long, drawn-out set of negotiations which may not lead anywhere, odds are that it will take a little more than just simple taunts to start launching missiles. 

But nuclear weapons are just one type of threat. To be sure they are the biggest and baddest. However, to use them is most assuredly shooting yourself in the foot in the biggest possible way. The interconnectedness of today's world means using that kind of weapon is not a zero sum game. You might decimate another country physically and win the battle, but in one sense you will lose the war. That's because your export market goes up in that mushroom cloud along with all the buildings and people. Blow them up, and you are basically plunging a stake into your own economy as well. 

As such, the focus is shifting from physical threats to the economic variety. Other than fighting terrorism, the only way nation states are using the term "war" these days is in relation to trade. We lobbed tariffs at Chinese products ranging from aircraft tires to boat motors to chicken incubators. They fired back with tit-for-tat penalties on a wide variety of goods exported from us, including fresh or dried guava, stainless steel pipes, and fresh or cold boned pig forelegs, hindquarters and their meat. Nasty and probably counterproductive, yes. But in the scheme of things, unless you were just about to pick up a cheap Chinese electrical particle accelerator, relatively surgical and targeted pickings from both sides.   

In fact, in light of current events, any country needs to consider who they are pissing off, and what can kind of leverage they really have. If North Korea's biggest export to us is nukes (the incoming variety) and that is taken off the table, what arrow in their economic quiver can they threaten with or be threatened with? Their biggest export is coal briquettes, which are kind of like the stuff you use in your grill, but made of asphalt. They are also big in processed fish. So I think we may have the upper hand there. 

Then there's the situation with our neighbor to the north. Odds of a shooting war with Canada are pretty slim. But a lot of goods go back and forth across that border. That means their biggest weapon (and also pressure point) may be their dominance of the global maple syrup pipeline. Do we really want to antagonize the country that exports 82% of the world's supply? Pancake eaters from Duluth to Austin should be shaking in their boots. 

That's not to say that it doesn't cut both ways. Canada is having issues right now with tariffs on its pulse exports, which are the dried and edible seeds of plants in the legume family. Seeking to gain some trade leverage, back in March India increased tariffs from 44% to 60% on incoming chickpeas. Still, Canadian chickpea producers aren't panicking just yet, as the main crops sent there from the 18,000 pulse crop producers in Saskatchewan are lentils and peas. Most of the Canadian chickpea crop goes to the US and Turkey. But if we draw a line in the sand over hummus, it'll be a whole different story. 

It's the same all over. Benin has to worry about it's shea butter exports, while Palau has to be concerned with its tuna industry. Tonga is big in vanilla beans, while Jamaica has rum. In Australia it's coal, in Chile it's copper, in Madagascar it's coffee. As Boston's David Ortiz said, "Everybody has a responsibility. Even the batboy." 

But this is all just mosquito bites. Sure, there are pockets in each country that will be hurt by the various nibbles and nicks. If you're a Kentucky bourbon producer, you're not happy. However, making knit caps more expensive or tightening the supply of lawnmower engines is unlikely to bring an economy to its knees. But keep your eyes open. When you start to see tariffs on iPhones and Taylor Swift songs, you'll know that the gloves are finally off.

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Marc Wollin of Bedford wants to protect the domestic peanut butter cup market. His column appears regularly in The Record-Review, The Scarsdale Inquirer and online at http://www.glancingaskance.blogspot.com/, as well as via Facebook, LinkedIn and Twitter.

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