Picking Trading Partners

All trade begins with customers needing products. Prices should be based on supply and demand.  If product inventories are high, prices will likely be lower. If product inventories are low, prices will likely be higher.  This is the “Law of Supply and Demand”.

Customers include individual consumers, businesses in industries and government entities. Consumers look for price and quality. Businesses can further lower prices based on the volume they order. Government purchases have political strings attached and suppliers demand concessions.

US companies are used to complying with US Federal laws and regulations including import and export documentation and prohibited country lists.

All countries are currently attempting to limit wars because of the cost of lives, property damage and refugee disruption. When other countries misbehave, we now use our electronic connectivity to freeze assets and use our trade rules to attack transgressors’ economies. We know that Hitler would not have been able to start World War II if the allies could have stopped banks from funding his military buildup. We now have that capability due to advances in electronics and communication.

US companies continue to list “approved suppliers” based on their capabilities, competitive prices and stability. After these requirements are met, companies cut purchase orders for goods from US and foreign suppliers based on price and delivery. Key suppliers are more likely to move to friendlier countries if the countries they are in are being embargoed.

The tariffs being used to remove US manufacturing from China and restore manufacturing back to the US and other sanctions are affecting China. Sanctions to stop global terrorism and nuclear weapons are affecting Iran.  Sovereign bankruptcy affects Venezuela.  Aiding Venezuela results in sanctions on Cuba, Sanctions for border challenges affects Russia. Sanction for developing nuclear weapons affects North Korea.

With sanctions from the West, Iran, Venezuela and North Korea are relying China and Russia to keep them afloat. Current dynamics between countries suggests that Russia and Iran will sell oil to China. Russia and China will continue to drill oil in Venezuela and subsidize Cuba. Countries like Turkey, Syria and others will support Russia, but will try to keep trade with the West.

If the US wants to expand trade to highly populated countries, India could replace China. Both have populations over 1 billion. 

Japan is a close US ally with limited land and a population of 125 million. Japan provides the US with popular, well-made cars.  Japan is a likely customer for US agricultural exports and will likely be an importer of US oil, natural gas and coal. Other Asian oil importing countries include India, South Korea, Thailand, Singapore, Taiwan and others.

Europe is likely to import US oil and natural gas based on cost and delivery. European oil importing countries include Netherlands, Germany, Spain, Italy, France, UK and Belgium.

US energy exports should continue to increase and give the US export dollars to off-set imports and achieve balanced trade. Trump is encouraging all countries to produce what they consume.

If China refuses to end intellectual property theft, Trump is likely to tariff all Chinese electronics and high tech products. This would secure and restore US intellectual property going forward.

Norb Leahy, Dunwoody GA Tea Party Leader