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DAVID KRUSE

By Staff | Apr 7, 2017

I am probably not a big fan of soy sauce but a lot of Americans buy a lot of the stuff. Kikkoman’s has been making soy sauce in Walworth, Wisconsin, since 1972. Kikkoman is Japanese owned, reported to be a $441 million investment in Wisconsin that has provided good long term jobs there. Kikkoman has been running TV ads touting the investment commitment of the Japanese company and of Japan itself helping to provide jobs to the U.S. economy. What is going on here?

The election of Donald Trump as president swept in a new world view of the U.S. relationship with both allies and enemies that is starkly different than what the world had operated under since Bretton Woods in 1944. Not all of the pick-up sticks were in order before the election but most recognize that the prior world order has been tossed into the air and there will be a new sorting out as to relationships with the U.S. and the U.S. with the rest of the world.

Most global institutions, UN, IMF, World Bank, have functioned because of committed U.S. support, which is no longer assured. Just because you were our buddy before doesn’t mean that you will be our buddy now and even our enemies such as Russia are sensing a different relationship. To be our friend, countries will have to re-earn that designation and that will require providing some strategic reason for the U.S. to accept the partnership.

Of all countries, Japan was most concerned about this. They depend on U.S. strategic forces for defense and U.S. markets for their commerce. Donald talked about putting tariffs on Japanese made autos and complaining about yen currency manipulation. Japanese Prime Minister Abe was over here lickety split meeting Trump at Mar-a-Lago trying to establish a personal relationship with the new president.

Abe gets it, that new relationships are being established and the concern on the part of Japan was evident. Japan is selling hard that compared to most other countries, Japan has invested more heavily in the U.S. in businesses that have created jobs and are using examples such as Kikkoman to sell themselves and their worth.

I visited the WWII museum for nearly a full day when in New Orleans at the RJO conference recently. The museum is the country’s third most visited museum behind the Smithsonian in Washington and Modern Arts in New York.

My favorite part of the exhibition was a traveling exhibit from the Holocaust Museum on Nazi propaganda that I will fashion into a future report. The point I wanted to make here is that after walking out of the “Road to Tokyo” exhibition there which chronologies the rise and fall of the Japanese empire and the War in the Pacific, it seemed astounding that today, 70 years or so later, that Japan is our friend and China is our contentious challenger. That wasn’t the way WWII ended nor what Japan at that time deserved.

I am still angry at Japan, but Mao blew the post war relationship with the U.S. with his communist insanity and Korean War incursion that Beijing still hasn’t fixed with war or peace. I don’t think that the renegotiation of the Sino-U.S. relationship will go as well as with Japan. Chinese companies do not have the story of creating as many jobs as does Japan to tell,but they are origination of the Wal-Mart supply chain.

The bottom line here is that to be a friend and partner to the U.S., countries are going to have to sell their strategic importance to the U.S. to the President.

Israel appears to get a “bye” probably because the Kushner’s are Jewish. Otherwise that need to prove their worth includes former allies such as the UK, Germany, the Saudis and even Australia.

The U.S. used to provide the world with a lot of services for free and that is not going to be the way it is done in the future. Under the new program, if the U.S. does something for you, much is expected in return. Trump would not send our military to protect Saudi Arabia from a serious security threat unless he was promised some oil. That is why the royal family is off to Asia to cultivate new relationships, both commercial and strategic. Shale oil and gas technology is breaking U.S. free of dependence on OPEC.

Trump expects a great trade agreement with the UK to help it with Brexit negotiations divorcing from the EU. It will cost the Brits. If Trump lives up to his promises it should cost them the “precautionary principle” blocking U.S. products from the UK market. Trump supports NATO only if the EU ponies up.

Trump appears to have no problem with the EU unraveling as together they are a stronger commercial challenge to the U.S. Whatever makes others weaker in the world makes the U.S. stronger. There will come a crisis event somewhere in the world where the U.S. would have historically intervened based upon the post Bretton Woods world order where the U.S. will not show up. That will signal “the change.”

Australia trades much more with China than with the U.S. Trump doesn’t care that the Great Barrier Reef is dying that is important to Australia. Australia has to prove value to the U.S.

It is like the U.S. terminated all agreements with the rest of the world that have been in place for decades and they are being renegotiated.

I think that voters wanted change when they pulled the lever for Trump and for many of them he is doing exactly what they hoped. It will take a while to sort out the new world order.

There will be much more to this report.

David Kruse is president of CommStock Investments Inc., author and producer of The CommStock Report, an ag commentary and market analysis available daily by radio and by subscription on DTN/FarmDayta and the Internet.

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