The Fall Of Afghanistan And U.S. Foreign Trade

Afghanistan’s fall to the Taliban upon U.S. withdrawal raises concerns about our country’s foreign trade in general. Will our export markets continue to buy our products, and will our import sources continue to supply us with goods and services? In most cases, the Afghan experience will have little impact, but watch out for what happens in countries dependent on U.S. military protection.

Direct exports of goods to Afghanistan is pretty low, about one-twentieth of one percent of total U.S. exports. Loss of that market will be no big deal. But what of other markets?

The United States has certainly lost credibility in world opinion. U.S. commitments overseas will be doubted by business and political leaders around the globe. That will bring focus to the countries currently dependent on American protection. International deals are mostly about good products at good prices, with politics of secondary or tertiary consequence. But ongoing commercial transactions depend to some degree on political stability of the partners’ countries. And that stability may be in question.

Among the potentially vulnerable countries, our largest trade partners are South Korea (3.6% of U.S. merchandise exports) and Taiwan (2.1%). One can imagine China being emboldened by, in their view, our weakness in Afghanistan. They might send their army to Taiwan and encourage North Korea to invade South Korea. China has also challenged the Philippines in the South China Sea. That country has to re-think U.S. commitment to protect their offshore territorial claims. However, a military confrontation between the U.S. and China seems unlikely, though small challenges are almost certain.

Hong Kong (1.7% of U.S. exports) has already been abandoned by Britain and the U.S. to Xi Jinping’s mercy.

Back to the Middle East, neither the United Arab Emirates (1.0%) nor Saudi Arabia (0.8%) could withstand an Iranian attack if the U.S. declined to help.

Israel (0.7%)  could mount a very sharp counterattack on Iran or any other aggressor, but U.S. support certainly helps to deter hostility.

The Baltic states of Lithuania (0.1%), Estonia (0.02%) and Latvia (0.02%) could do little against Russia without NATO assistance, which practically means U.S. support.


All is not lost, though, despite the loss of face by America. The Biden administration, and future presidents, would likely stand up to aggression against any of these countries.

Afghanistan has been known to be a waste of U.S. resources—lives, dollars and attention—since shortly after we arrived. But prior presidents realized or were counseled that a departure would look like the fall of Saigon. Like Presidents Kennedy and Johnson, recent presidents decided that continuing a hopeless war would be better than an embarrassing admission of the truth. President Biden in the future and the next half-dozen presidents after him will remember the political fallout of withdrawal. They will continue to support our allies. There may have to be an incident or two to avert a major confrontation with a strong foreign power, but most likely the U.S. will do what it takes to regain some credibility as a defense partner.

Protection of shipping may well be a critical issue going forward. Safe access to the Suez Canal requires that countries surrounding the Red Sea—Egypt, Saudi Arabia, Yemen, Djibouti, Eritrea and Sudan—not interfere. This is an issue important not just to the United States but also Europe and China (most of whose exports to Europe pass through the canal). Most likely all of the interested countries will support whatever action is needed to protect shipping.

Similarly, one can imagine China demanding the right to inspect Taiwan-bound vessels passing near their country. This could be a first step toward exerting more control over Taiwan. U.S. failure to stand up to China would put Taiwan in the same position that the Afghan military was in. Without the big ally’s help, defeat is certain. And if defeat is certain, early surrender is better than late surrender.

Going forward, most U.S. foreign trade will continue despite America’s loss of prestige from the Afghanistan debacle. But look for an incident that will define the U.S. commitment to a particular foreign country, and to fulfill our foreign commitments in general. Let’s hope that the incident will be minor and bloodless.

China Politics

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