NDTO News Article

The Effects of Ongoing Global Conflicts on Trade

In the past five years, an unfortunate number of conflicts have broken out between nations, cultures, and classes that have harbored decades-long resentment toward one another for various economic, political, ethnic, and religious reasons. Most of these conflicts have yet to reach a turning point that will bring about resolution.

The global trade network is known for its ability to absorb major blows and successfully rebuild in the aftermath. However, with no end in sight for the multi-nation and civil wars ravaging lands and people of Asia, the Middle East, Africa, and more, a new normal has settled over all trade processes.

 

The Conflicts

  1. Russia & Ukraine1

Soon after Russia’s invasion of Ukraine in 2022, there was an immediate surge in pricing and overproduction across multiple industries within multiple markets. This rise was a result of companies attempting to compensate for the sudden loss of Ukrainian suppliers and Russia-enforced sanctions.

 

  1. Israel & Hamas2

The devastating war between the State of Israel and the terrorist group Hamas has caused widespread disruption to the global supply chain. Merchant ships have resorted to going around Africa to avoid the Red Sea, where other terrorist cells sympathetic to Hamas are openly attacking trade vessels. Additionally, some countries have imposed trade embargoes on Israel due to their disapproval of Israel’s role in the worsening humanitarian crisis in Gaza.

As of January 15, a ceasefire deal has been made and will go into effect in the coming days.

 

  1. Sudan: Sudanese Armed Forces (SAF) & Rapid Support Forces (RSF)3

As Africa’s third-largest country, Sudan is a major agricultural producer. It is the world’s largest exporter of oil seeds. It also has major gold mines and oil reserves. But their dominance in these areas has left buyers in a panic over where they will turn if the ongoing civil war is not resolved. Already, Sudan has seen a decrease in production efforts.

 

  1. Myanmar: National Unity Government & State Administration Council4

A major factor contributing to the economic decline and trade disruptions caused by Myanmar’s civil war is the level of civilian displacement. Nearly half a million people have lost their homes or been forced to seek refuge elsewhere. Tourism, usually a good contributor to the country’s wealth, has fallen significantly.

 

U.S. Involvement

The United States has become a key mediator in the economic and diplomatic discourse created by these global conflicts. As a mediator, the U.S. has offered support to allies and implemented sanctions to deter aggressors, particularly in the Russian-Ukraine conflict. These actions aim to uphold international stability but also have significant consequences for global trade.

For instance, U.S.-led sanctions against Russia have cut off key resources like natural gas and metals from global markets, prompting businesses to seek alternative suppliers. Similarly, American financial aid and agricultural exports have provided vital support to regions experiencing food shortages, demonstrating the country’s dual role as both a stabilizer and a major trading partner.

However, these efforts are not without challenges. Sanctions and embargoes often result in retaliatory actions, creating ripple effects that increase costs for American exporters and consumers. The U.S. also faces pressure to carefully balance its interventions, ensuring they do not exacerbate tensions or create unintended trade barriers for its own industries.

 

North Dakota’s Resilience

North Dakota has not been immune to the effects of these conflicts. As a major contributor to the United States’ agricultural exports—particularly wheat, soybeans, and corn—our state has felt the brunt of trade disruptions and market volatility. For instance:

  • Wheat Prices and Ukrainian Competition: As one of the largest wheat producers in the U.S., we have seen fluctuations in demand and pricing tied to the disruption of Ukraine’s wheat exports. Ukraine has historically been a top competitor, and the war has both limited their supply and caused uncertainty in global markets. This dynamic has presented mixed outcomes: some North Dakota farmers have benefited from higher prices, while others face challenges in long-term planning due to unpredictable global demand.

 

  • Fertilizer Costs: Many North Dakota farmers rely on imported fertilizers, and the conflict in Ukraine has impacted the supply of key inputs such as potash and nitrogen-based products. Russia is a major exporter of these materials, and sanctions, along with logistical barriers, have increased costs for North Dakota’s agricultural sector.

 

  • Energy Markets: As a state rich in oil resources, our economy is closely tied to the energy market. Global conflicts have resulted in spikes in oil prices that temporarily benefited North Dakota’s oil producers. However, long-term uncertainty and geopolitical tensions have made energy markets volatile, affecting state revenues and business confidence.

 

  • Trade Route Challenges: The disruptions caused by conflicts like those in Israel and Sudan have complicated global shipping and logistics. North Dakota exporters, especially those relying on international markets, face higher transportation costs and delays in reaching key markets like Asia and the Middle East.

 

Despite these challenges, North Dakota’s resilient agricultural and energy sectors have adapted by diversifying trade partners and investing in new technologies. However, maintaining global competitiveness amid ongoing geopolitical instability remains a pressing concern.

 

The interconnected nature of today’s trade networks means that conflicts, even thousands of miles away, can impact local economies. North Dakota’s experience highlights the vulnerabilities and opportunities that arise in turbulent times. While global conflicts bring uncertainty, they also underscore the importance of fostering strong trade relationships and investing in sustainable practices to weather these storms.

 

1Russia’s Aggression Against Ukraine: Global trade implications after 7 months of war | International Institute for Sustainable Development

2Israel Raw Materials Supply Chain Affected by Israel-Hamas Conflict

3How businesses can play a peace role in the Sudan war | World Economic Forum

4Myanmar’s economy is deteriorating as its civil conflict intensifies, World Bank report says | AP News