Trade Wars Redux: King Cotton Always Wins

Today, the US is once again entangled in the politics and economics of cotton. The United States has announced that it is prepared to ban cotton and tomato imports from China’s Xinjiang over allegations of forced labor. The irony lies in that the world’s once largest economy, built on forced labor in cotton production, is now seeking to halt China imports based on allegations of the same. A further decoupling that the US is seeking to marshal against the Far East giant, in an attempt to role back years of under-developing its own economy and shipping American jobs overseas for “outsourcing.” The result of which has transformed a once diverse economy into a narrow service-bound economy reeling from the ravages of corona virus.

In the Antebellum south, it was known as King Cotton. It was the largest, most lucrative cash crop powered by African slaves in the new colonies and the nascent United States. It is estimated that an average slave hand-picked up to 200 pounds of cotton a day. According to one Yale study, women were expected to pick as much cotton as men. According to research by Harvard Professor Henry Louis Gates Jr. for PBS, cotton was among the first luxury crops the US traded and created bedrock wealth for not only the South, but the Northern states and Great Britain.

In 2019, China purchased 1 billion in US Cotton as part of Phase 1 of the beleaguered Sino-American Trade deal, according the the USDA. In 2018, China imported 119,000 tons of US cotton (11 percent of China’s cotton imports), but in 2017 the asian nation imported 45 percent of its cotton from the US. It is not clear how the new measures will effect the US or China market. Already with a drop of nearly 75 percent, US cotton producers must be hurting.

In fact, if it were not for the pandemic, the precipitous drop in cotton exports could have thrown the nations into recession alone. In fact, the US had already registered a bonafied recession before Covid-19 Lock down, according to a report from the National Bureau of Economic Research.

The fact is that many Americans are unaware of the hemorrhaging industries. The lock down helped to freeze what is increasingly becoming an avalanche of industry and financial suicides and closures. The US has begun to court smaller less efficient production economies like India and Kenya for trade deals and arrangements for which they may be ill equipped to handle. The fact is, the US has been dependent on external labor and industry for decades now, and is ill-prepared to pivot from China even as it forges ahead to do so. In fact, US cotton prices has continued to decline since 2018 when Washington ramped up its trade war efforts. But America’s “King Cotton”industry is not alone, Crude Oil, soybean, beef, pork, LNG, Aerospace, machinery, electronics, vehicles and more. Could it be the exorbitant meat prices during lock down came as a result of livestock and agro-processors trying to past the cost on to unsuspecting Americans? Is the American consumer missing something vital in the melee of polarized political grandstanding and sleight of hand?

The truth is, many Americans are not aware of the industry and financial mechanization of the US; while most Americans peer hopefully into the crystal ball of the US Stock market. The unfortunate disconnect between the stock market, American industry and jobs data leaves most Americans believing recovery is imminent. Even the US’ silent Oil War with Russia has a more clever name, as the Slavic nation now wields considerable control over oil prices. Many US-facing oil interests will want to offload hundreds of barrels in oil surpluses to avoid massive debt, loss and a constricted market that could halt production entirely.

Even as oil exerts its influence, the question becomes whether King Cotton be the linchpin in America’s attempt to decouple from China? Will the move unleash prosperity or an avalanche of calamity? It is for certain that King Cotton made the US the best economy in the world for centuries, but now the question is whether it will make it the worst?