World Trade is suffering Death by 1000 cuts
It should come as no surprise that globalization is coming apart at the seams from a 1000 different knife wounds.
Everyone here should realize by now that economies don't just die from suffering one fatal cut or blow, they are complex structures that can pivot when troubles arise. Let's jump in and check on our patient:
- It all started prior to CV-19 lockdowns, when then, President Donald Trump, slapped Tariffs upon China, This was a major blow to our major trading partner. As Tariffs have traditionally been held as a last resort action when nations struggle to workout trade disputes, etc. But then President didn't hesitate to place many tariffs upon China.
- Lockdown pressures - shutting down entire economies - yeah that hurts everyone!
- Fast forward to '22 the US unveiled 1000's of sanctions directed at Russia for Invasion of Ukraine and subsequent War.
- Ukraine war has limited components used for Information Technology lasers (Optics) and key elements for Chip manufacturing
- US has been restricting trade w/ China, Russia, Iran, Venezuela, the list is as long as my arm so I limited to these few.
- India & Canada are expelling diplomats
- India & Pakistan continue to test each other along their respective borders
- China stopped mining Rare Earth Elements in Myanmar back in April '23
- China also considering Rare Earth Elements exports - April '23
- China slapped Australia with several trade limits
- Started w/ Barley
- It moved to Beef and Coal (oh no, a troll trigger word)
- Timber exports from 2 AU regions
- Copper Ore
- Food Stuffs - Lobsters, Sugar & Wine.
- Nord Stream Pipeline (Russia to Germany) - blown up my a mystery player? Perhaps it was the Aliens?
- Nord Stream 2.0 - This pipeline supplying Finland and Estonia was deliberately damaged. - Week of Oct. 1st
- As inflation takes more and more disposable income out of American wallets they have less to spend on discretionary items. Where does most of the world get goods from? If your answer is China you are correct! China is exporting less goods to the globe, and if the US catches a cold the World catches the FLU! You ready for a long and painful cold season?
- To further strap US Consumer - student loan payments restarted last week after 3-year hiatus. Further restricting discretionary funds of Americans.
- China stopped exporting two minerals used for Chip manufacturing - Oct. '23
- Myanmar stopped mining of Tin - prices rise
- Burma stopped mining efforts impacting Rare Earth Element exports - Oct 8th
So, let's recap, limited items cause shortages which cause increased prices, which fuel inflation. Anyone else see a problem here?
Summary
Even the IMF has recognized global trade has slowed! So, I leave you this quote "There are two kinds of pain in this world, the kind that hurts and the kind that alters." What will be the straw that breaks the back of global trade? Or will it be a hot War such as WW III? If its the later all bets are off folks, as the stuffing will be out of everything quickly.
Credits
Quote - Equalizer Train Scene - much love!
Pic - IMF
