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Did the US flower market dodge a bullet?




The US and Colombia nearly began a trade war on January 26-27.

Colombia refused to take in planeloads of migrants that the Trump administration has decided belong there. Trump announced ginormous tariffs on Colombian exports to the US [the legal traffic -- chiefly this means coffee and cut flowers] and after some mutual posturing Colombia backed down.  The migrants will go 'back' to Colombia.  [I am not at all confident that is where they came from -- no vestige of due process or diligent inquiry seems to have been involved. But I'll ignore that right now.]

What about those cut flowers?  There has been a fair amount of commentary about how US florists and their customers have dodged a bullet.  Prices will not skyrocket just before Valentines Day, after all. Whew. 

EXCEPT.  That isn't how it works.  Prices at the retail level tend to react to risks of supply chain obstruction.  They don't wait for the reality of the obstruction to show up.  Try pitting Trump in an analogous brief shouting war with Saudi Arabia, and a two-hours-long boycott of Saudi crude oil.  Then one side or the other blinks, the matter is resolved, and there is no actual physical obstruction of the movement of oil from one country to the ports of the other at all. Will it leave the price of oil unaffected?

Heck no!  Nor, if one wishes to make moral judgments here, is there any reason why it 'should'! Such a brief drama would heighten market participants' sense of the risk of what they are doing, and the possibility there will be some tariff hike or blockade in response to some other catalyst down the road. 

My guess is: there will be some increase in Valentines' Day bouquets this year -- if you buy them late.  If you've already ordered then for your sweetheart by now ... good for you.  

If you are a retailer and are marking prices up because of your heightened sense of risk ... likewise, good for you.  You owe no one the debt of dupery.  And your actions help the necessary adjustments to the volatility of the lunatic in power. 

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