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Okay, let's make the example even MORE explicit. In normal times we'd buy most of our actual supply from China or Taiwan, because they're the cheapest, fastest,
by glenra 13y ago
Okay, let's make the example even MORE explicit. In normal times we'd buy most of our actual supply from China or Taiwan, because they're the cheapest, fastest, most flexible supplier. We'd buy those side OPTIONS (that are never exercised other than in a time of war) from companies NOT in China. We'd buy the options from companies in, say, Brazil, Mexico, Argentina, and Canada. Where the steel is typically a little more expensive per unit.
In the middle of a war with China or Taiwan, a foreign company in Brazil, Mexico, Argentina, or Canada is unlikely to consider us "the enemy", so they'll have no trouble selling us all the steel they can make at the inflated prices we're willing to pay. The contract and the higher-than-normal price it specifies, should suffice to compensate them for inconveniencing their normal customers, foreign or domestic.
- harryh 13y agoWhat happens when China bombs the plant in Brazil and cuts off 25% of our supply?
- glenra 13y agoUm, you mean cuts off 25% of our potential supply. What happens then is we exercise more of our options (or just negotiate new deals) elsewhere to make up for it. In short, pretty much the same thing that happened when China declared war in the first place. However many plants in however many countries they bomb, we're still better off than if we had used and they had bombed the same plants in the US. Fewer American casualties, certainly. (Are you expecting China to declare war on us and bomb every country in the world that we do business with? That seems like a pretty expensive and unlikely proposition. It's also worth noting that international trade all by itself tends to improve communications and reduce the potential for hostilities.)