“Russia controls 4 percent of global cobalt production, for example, and 11 percent of nickel production. Following the sanctions package dropped on Russia, cobalt’s price increased from $74,000 per ton to $82,000 per ton and has now more than doubled since the start of 2021. Nickel’s price, meanwhile, has zoomed since the beginning of March, rising from $25,000 per ton on March 1 to a high above $45,000 briefly before settling at $32,000. Since 2019, the price of nickel has nearly tripled.
Shortages and price rises in those commodities will stymie any transition from carbon-emitting combustion engines to electric cars, since the average electric car battery contains 80 pounds of nickel and 15 to 30 pounds of cobalt. Increased gas prices due to a Russian oil collapse would not necessarily increase the adoption of green energy programs because electric cars, solar panels, and wind turbines all use nickel and cobalt to varying degrees. The rising costs of nickel and other inputs will very likely cause electric vehicle batteries, which were growing rapidly less expensive over the last decade, to stop getting more affordable until at least 2024.
Reduced access to Russian commodities will drive up the cost of renewables and electric vehicles as gas prices also increase. It’s easier to increase oil production than it is to increase nickel or cobalt production; America has at least 35 billion barrels of proven oil reserves and OPEC can increase oil production whenever it wants. Pumping more oil is a faster and less arduous process than building a new nickel mine.
But the U.S. has another available source of nickel and cobalt that could be counted on when countries on the other side of the world have production difficulties due to war or internal strife, and it’s a scant 90 nautical miles off the coast of Florida.
Unfortunately, this source happens to be Cuba, and American companies have been forbidden by law to do business with Cuba for most of the last 60 years.”
“Expanding road, rail and river links between the EU and Ukraine won’t be enough to stave off an economic and humanitarian crisis, Ukraine’s Deputy Economy Minister Taras Kachka told POLITICO.
“We cannot ensure the same volume of exports as via seaports by other means of transportation in forthcoming weeks or even months,” Kachka said. “The only way to ensure proper reinstallment of export is to unblock sea ports. This is the only solution.”
The comments were in part a response to European Agriculture Commissioner Janusz Wojciechowski, who said last week that he was “ready” to establish fast-track trade routes to and from Ukraine to bring fuel to the country’s desperate farmers, and help take their produce out while maritime trade is frozen due to its ports being under Russian fire.”
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“Some of Ukraine’s cargo has shifted to Izmail, Reni or Kiliya — smaller ports on the bank of the Danube, in the southwest of the country. But those have limited capacity.”
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“The logistical challenge is immense. Before the war, Ukraine shipped over 70 percent of its exports. In 2021, 99 percent of Ukraine’s 24.6 million tons of corn exports were shipped out.”
“Buy American provisions ensure we won’t get nearly as much infrastructure for the money as we otherwise could.
That’s because domestically manufactured materials and products often cost more than foreign alternatives. Otherwise, you wouldn’t have to require that project sponsors use them.
Buying American steel for infrastructure projects costs around twice as much as importing it from China, according to a 2019 Congressional Research Report. That requirement cost American roadbuilders an additional $2 billion from 2009 to 2011, back when then-Vice President Biden was overseeing the spending of stimulus dollars on infrastructure projects.
Procuring American-made buses means that we pay twice as much as Japan and Korea do for their rolling stock. Our train cars cost as much 34 percent more because we insist on buying domestically.
Because these requirements can be so onerous, federal departments often grant exemptions to Buy American rules when they make projects economically infeasible. Biden is making sure fewer projects get those cost-saving exemptions.”
“If concentration in the marketplace was somehow to blame for rising prices, then it would make sense to attack that problem by expanding competition. Give consumers more choices and they will naturally flock to lower-priced alternatives, putting pressure on other sellers to keep prices down.
The problem, for Biden, is that so much of his economic agenda is pointed in exactly the opposite direction. In one breath, he complains about the lack of consumer choice driving up prices. With the next, he proposes to further restrict consumer choice.
“We will buy American to make sure everything from the deck of an aircraft carrier to the steel on highway guardrails are made in America,” Biden said, before promising that his administration would make some of the “biggest investments in manufacturing in American history” to bring about “the revitalization of American manufacturing.””
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“”Shifting demand to American producers with ‘Buy America’ polices [sic] that stop firms and consumers from buying at the lowest cost, no matter how politically attractive, are inflationary. This is something all economists should agree on,” Summers tweeted. “Blaming inflation on corporate greed or holding out the prospect that capacity can be expanded rapidly is at best diversionary.””
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“Tariffs are also contributing to inflation by artificially raising the prices of imported goods, including products like raw steel, aluminum, and lumber that are necessary inputs for American manufacturers and home builders.”
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“The two researchers found that costs imposed by trade barriers were passing along nearly in full to consumers. For every 1 percentage point increase in the cost of imported construction materials caused by tariffs, for example, they found domestic price increases of 0.9 percent after six months.”
“The US is not a major consumer of Russian crude oil, which makes up less than 4 percent of US consumption, so banning imports shouldn’t have a huge effect; the US doesn’t import any Russian gas. The US can make up the oil gap with imports from other countries, and the Biden administration already is pursuing that path by opening talks with Venezuela. Nor is Russia all that reliant on the US, because US purchases account for about 9 percent of its exports.
The bigger impact on the price of oil comes from what Biden’s announcement portends. Global oil prices have been fluctuating wildly in recent days, reflecting that there is a wide range of uncertainty over what could happen next. One of the uncertainties is whether more countries will follow the US’s move to ban imports, taking Russian oil off the table for a number of foreign markets. Cutting out Russia makes oil more expensive, because it upends the existing network of pipelines and makes countries’ paths to getting oil longer and more expensive.”
“The so-called “phase one” trade deal inked in December 2019 by former President Donald Trump and Chinese President Xi Jinping might have put an end to the spiraling trade war between the two countries, but the agreement did not result in China buying more American goods, as both leaders promised it would. In fact, during the two years covered by the deal, China imported fewer American goods than before the trade war began—meaning that the deal did not even succeed at patching up the damage caused by Trump’s bellicose trade policies.”
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“We now know that the promised benefits did not materialize. But the costs certainly keep adding up. Auto manufacturers, for example, shifted supply chains to avoid the cost of tariffs and economic uncertainty created by the trade war—by relocating some American manufacturing jobs to China, which has become a large and growing market for auto sales. BMW, for example, shifted much of the production of its X3 sport-utility vehicle from Spartanburg, South Carolina, to China after reporting that tariffs had cut the company’s American profits by about $338 million in 2018. The higher costs imposed by the trade war caused Tesla to announce that it was “accelerating construction” of a new plant in Shanghai.
Overall, Bown estimates, exports to China would have been $26 billion higher in 2020 and $39 billion higher in 2021 if not for the impact of the trade war and subsequent trade deal. That doesn’t account for other losses sustained during the trade war, like the increased farm subsidies paid for by American taxpayers and the run-of-the-mill cost increases created by tariffs.
Aside from some positive developments with regard to China’s treatment of intellectual property and financial services, probably the only good thing about Trump’s “phase one” trade deal is that it has now expired.
“President Trump’s trade war and phase one agreement did little to change China’s economic policymaking,” Bown concludes. “Beijing seems intent on becoming more state-centered and less market oriented.””
“Dozens of countries across the Middle East, South Asia, and North Africa that already suffer from food insecurity rely on Russia’s and Ukraine’s bountiful supplies of wheat, corn, and vegetable oil, and experts say the conflict could send food prices rising and