In 1860, the manufacture of cotton textiles was Europe’s biggest industry, and European textile mills got over 90% of their cotton from the American South. However, as soon as the Civil War began, the Union navy began blockading Southern ports. Within a year, European textile mills began running out of cotton. Hundreds of thousands of Europeans lost their jobs. It was called the ‘Cotton Crisis’ in England, which was especially hard hit. Britain and many other European countries started looking for other sources of cotton. The British began getting their cotton from India. (Cotton is native to India.) Other European countries with overseas colonies also started growing cotton in lands they controlled. By the time the Civil War was over, the big European cotton buyers all had new sources for their cotton. Growing cotton for export to Europe had made Southern cotton plantation owners rich, but they lost the European market as soon as the Civil War began, and they never got it back. Southern cotton plantations were never as profitable after the Civil War was over as they had been before the war. I wonder – will history repeat itself? Will China and other countries that have been buying agricultural and mineral commodities from the U.S. come back and buy these products from the U.S. again after this trade war is over? Or – have we lost these markets forever?
In reaction to Donald Trump’s tariffs on Chinese-made products, China has stopped buying U.S. soybeans, and China buys a lot of soybeans. China will now be getting their soybeans from Russia. As a result, the price of soybeans in the U.S. has fallen by about 20%. For soybean farmers, that’s the difference between making money and losing money. However – the bigger concern is this – once this trade war is over or when Trump leaves office, will China ever come back and buy U.S. soybeans in the future? Maybe not. Once a country determines that they don’t want to be dependent on a particular foreign source of some commodity, they often find new sources and never go back. That happened in the Civil War.