So says Karl Denniger:
Let’s face facts: China is not going to cut off US soybean imports.
They can’t.
There is no global supply to make it up.
If they do it they start starving their own population.
Trump has won this already, and if he doesn’t know it he’s stupid beyond words. If he does know it, and I suspect he does, he should tell Xing-pooper-scooper to “go right ahead; the blockade against Chinese goods starts now.”
China’s economy would collapse in a month, shortly followed by food riots. That would be the end of that.
The simple reality is that we source things to them they can’t replace, and nothing we import from them is something we must have and can’t replace.
Yeah, there will be screaming over here — followed by plant re-opening, hiring, and jobs. Yes, prices will go up — 50 cents more for a pair of jeans, another dollar for a DVD player, etc.
China, the other hand, will watch their over-levered, debt-drunk “economy” detonate right in the face of their Central Committee. They will have to deal with literal food riots, never mind a destroyed banking and credit system.
I say bonne chance since there is also no possible way for them to shoot their way out of the hole either.
Amusing but not entirely accurate, unless the US is planning a real war. The US does provide nearly 40% of Chinese soy bean imports, which is roughly one third of its total consumption, but if China cuts it off the US is not going to let those beans die in the fields. They’ll end up somewhere else at lower prices, displacing other seaborne soy. The displaced volumes will end up in China.
The winners will be other big soy bean exporters such as Brazil and Argentina.
