The Panama Canal is in the news due to President Trump’s threats to take it by force, blaming the Chinese entities that, in his mind, operate it and frustrate American ships via the route through which 6% of global trade passes.
China doesn’t operate the canal, but its operations and smooth transiting of ships has suffered of late, most notably due to the intensification of El Niño thanks to climate change. In 2023 this wrought drought upon Central America that starved the canal’s locks of fresh-water and led to restrictions on shipping, doubling waiting times, reducing cargo sizes, and a backlog of 100s of vessels.
Thinking climate change is fiction, Trump fictitiously blames China. But while the world’s largest economy pivoting back to nationalist protectionism will disrupt globalized trade, the disruption to the canal’s function truly shows how fragile the smooth flow of global trade under whatever aegis really is.
Suez Canal
Around 12% of trade goes through the Suez Canal. It was of such importance that the two already spent imperial powers of Britain and France skewered themselves in their failed connivance to seize it in 1956. And in 2021 the world held its breath as a solitary digger sought to free the giant freighter Ever Given that had skidded, beached, and blocked the canal to all trade. Some 370 ships with $9.6 billion of goods aboard backed up, with even more backlogs blocking ships, barges, ports, and inventories beyond for months.
Microchips
Semiconductor supplies were badly hit – and may yet be again: 60% of the world’s supply, and 93% of the most advanced chips, come from Taiwan, and the independent island’s bellicose neighbour China claims it back, only last May circling it with warships in pique at its new pro-independence president.
Few in the US see Taiwan remaining independent beyond 2030. Contrast with supplies of lithium, integral to batteries, mostly from Chile, Australia, and the war-ravaged Democratic Republic of the Congo through cobalt, containing over half the world’s reserves and two-thirds of its output (mostly by child labour), and a similar hold on coltan reserves for tantalum, critical for computers. While the DRC’s internal conflict is spreading into the major cities, there is yet no great clamour over suppleis of these computer essentials, but a war on Taiwan and the disruption to semiconductor supplies would “bring the world to its knees” and “make Covid seem like a walk in the park”.
Could Tech Bros Elon Musk, Tim Cook et al countenance China’s forcible takeover of the global supplier of chips? They have what’s left of Trump’s ear, he who bristles to lay tariffs on China, which may see it definitely invade democracy as a domestic distraction and global show-of-strength. Would Musk & Co. demand Taiwan be defended – or would its reabsorption in a hostile takeover actually benefit and strengthen chip supply chains to China-based factories there, like Tesla, or Apple? What does DeepSeek mean for them? Which way will Trump’s ear be bent? If he’s up to taking Greenland, he might respect China retaking Taiwan, you just don’t know with this guy.
Covid repercussions
Trump believed China produced Covid, the fetid diseased blanket that smothered the world and led to untold bottlenecks. Europe’s desperate need for pain and pyrexia relieving paracetamol spiked its demand from its principal paracetamol supplier, India – never mind the locals. Even then, 70 percent of India’s pharmaceutical materials come from China which at the time was under the toughest of shutdowns.
And like the Suez blockage there were profound post-Covid knock-ons, one being a global energy supply crisis, hiking prices – then Russia’s invasion of Ukraine saw gas prices hit the Moon, with crazy outcomes. See, even pre-invasion, only 4% of Britain’s gas was Russian, of which there again only a fraction went into gas-fired power stations, themselves usually providing a quarter to a third of UK power (the rest mostly wind). And what gas Britain lost post-invasion was met by LNG, bought off the global market, and shipped from the world over without fuss, with much coming via the Strait of Hormuz (see below). So it shouldn’t have been much of a muchness if at all, right? Yet.UK power prices went mad, to the extent of hitting a 10-fold spike in August 22 at £364 MW/h compared wit
So apparently small, an economic meteor hitting the sea. Yet through the magnifying power of the very excitable markets, means just the idea of a threat to an nth of an nth of supply sends price tsunamis across oceans.
Back to hazardous space objects, numerous flights were disrupted by Musk’s disintegratingSpaceX rocket earlier this year – but it was very small beer compared with the 107,000 flights – almost half of global air traffic – affected by theEyjafjallajökull volcano eruption in 2010, affecting 10 million people.
‘Might over markets’
Those who prefer sovereign ‘might’ over markets can over-focus on essentials such that strategic blunders arise. The lack of oil halted the tanks and grounded the planes of Nazi Germany and Imperial Japan, but the pursuit of it fatally drew the former into the Caucasus and Stalingrad, and Japan’s fateful strike on Pearl Harbor was in response to the US oil embargo on the country.
For smaller potatoes, we can look at Brexiters, Dominic Raab infamously admitted in 2018 he‘hadn’t quite understood’ the significance of Dover in UK’s trade with Europe, handling at the time £119 bn or 17% of the UK’s entire trade, but since hit by border checks –repeatedly delayed even by Brexiters seeking we ‘take back control of our borders’– that add time andbillions in costs to imports and disrupt supply chains.
That makes a difference. A poorer Britain, with angrier inhabitants, a UK worth less to its allies and its leaders seeking favour with autocrats, a former world power taking on water, listing in international waters.
By accident or design, by war or unintended outcome, disasters natural and unnatural, in reality or in the mind, global flows of commodities and people can very readily gunge up and bring it all to a shuddering halt, send inflation and interest rates to the Moon and impoverish and anger people worldwide, a bounteous harvest of malaise for the far-right to reap. The Ukraine war’s interference with Black Sea exports ofwheat and maize sent wheat prices from $300 mt (metric tonne) to $522 mt and maize from $230 mt to $350 mt, particularly affecting the Global South, from where so many more migrants will come north as climate change beds in.
Now see what may come of the attack on Iran (added in light of recent events), something the US had never dared do since 1979, and this is possibly why: A quarter of crude oil and a fifth of global LNG supplies go through the Strait, and its closure following the US-Israeli attacks on Iran in February 2026 has led to months of vaulted hydrocarbon prices (and other predicted outcomes, per this US Congress report), with severe economic and political impacts not just at the petrol pump but right across supply chains, causing inflation and interest rates, affecting global investment and threatening a depression.
The impact on global food supplies is manyfold. Soaring diesel prices is hitting farmers and leading to road blocks; half the world’s urea, from which fertilisers are made, comes via the Strait, as does much carbon dioxide and methanol, used in refridgeration, impacting keeping perishable foodstuffs (and medicines) fresh, as methods of slaughtering livestock, leading to shortages in fresh pork and chicken. People can’t plough or fertilise the fields, can’t refridgerate fresh foodstuffs, can’t afford to cook what they bought (at an exorbitant knock-on cost). No one will escape some impact on food supplies and prices, and across much of the world it not for most of the poorest the impacts will be catastrophic (and further destabilising to governments and blocs worldwide). But not everyone’s a loser, oil companies are making an extra $30 million an hour in windfalls from the war, as are those engaged in suspicious market futures trades.
But it’ll be for the benefit of the screaming populists and their simple answers and conspiracy theories, which usually point to single puppet-masters, usually overly empowered individuals or companies, or people of certain religions, manipulating everything in their single-minded pursuits.
Then again it is, amid the opaque blur of interests and interactions between the impenetrably complex morass of competing entities, institutions, actors, nations, histories, motives, and ideologies in our world, it is very easy to miss how single events in forgotten places affect us all.
CLICK HERE TO DONATE TO OUR CROWDFUNDER
HELP US BECOME STRONGER SO THAT WE CAN CONTINUE TO DELIVER POWERFUL CITIZEN JOURNALISM!
