U.S. Ambassador Nikki Haley may have slapped North Korea with a double whammy, pushing through tough U.N. economic sanctions on the rogue nation that may also boost the U.S. economy. The freeze on assets and ban on exports could shut down more than $1 billion, or up to one-third of the Asian nation’s total exports. What may add insult to injury, is that it also plays right into Pres. Trump’s Make America Great Again agenda that has made a recent coal mining resurgence the poster child of prosperity.
Slapping Down North Korea
The United Nations Security Council unanimously passed a resolution to level heavy sanctions on North Korean exports as a result of its refusal to halt its ballistic missile program. Kim Jong-Un, dubbed “The Crazy Fat Kid” by U.S. Sen. John McCain, will endure yet another wave of crushing economic setbacks for threatening the United States. The Aug. 5 resolution seizes business assets and prevents North Korea from exporting coal, iron, iron ore, seafood, lead and lead ore. These penalties are on top of China (the country’s largest trading partner) already cutting ties in a recent show of U.S. allegiance and displeasure. The regime had been hit in November, 2016, with a forced rollback on exports such as copper, nickel, silver and zinc that stunted its already stagnating GDP by $800 million.
Are Sanctions A Strategic U.S. Win?
To the Trump Administration’s credit, these sanctions play right into the hands of newly opened American coal mines. China had been North Korea’s primary coal resource, contributing about 25 percent of its total coal imports. China relied on foreign mining for about 255.5 million tonnes during 2016, a jump of approximately 25 percent from 2015. Its growing manufacturing base is expected to increase the need for even greater coal imports in 2017.
American niche “coking coal,” used for making iron, had already enjoyed an uptick. In fact, U.S. coal exports grew by nearly 60 percent during the first three months of Trump’s presidency with increased demand from Asia and Europe for its metallurgical coal despite rising prices. Japan has plans on the drawing board to build 45 new coal-powered plants as a result of the Fukushima Daiichi nuclear disaster and other emerging countries are expected to follow suit. Demand for coal could run quite high and Americans have an opportunity to fill the need with a major player such as North Korea sidelined. Pres. Trump calls that “winning.”
China is also the largest importer of iron ore, topping all others with $57 billion or 67 percent of its ore usage. Japan and South Korea are a distant second and third at $7.3 billion and $4 billion respectively. Of the top 15 iron ore importing countries, all appear to be bound by the North Korean sanctions, including Russia. The United States had barely cracked the top 10 as an iron ore exporter in recent years, but the Trump Administration’s industry deregulation and market shortage may have American miners cheering, “Just dig, baby!” Across the board, the multiple sanctions leveled against North Korea create economic opportunities at a time when American businesses are ramping up.
While the Trump Administration hasn’t fired a single shot, it’s diplomatic economic force has ended the era of “strategic patience” and turned North Korea’s antics into a big league “art of the deal” win.