President Obama began relaxing restrictions on trade with Cuba earlier this year. That's got stogie-loving Americans starry-eyed with the hope that he will end trade restrictions altogether. It could happen. In fact, Bloomberg has a piece out about the cigar business implications if it does. This prompted me to wonder: Are cigar aficionados really the only Americans who care if we trade with Cuba? It sure seems that way.
Cuba is one of the few true communist totalitarian states still out there. China's a major U.S. trading partner, so it would seem that trade can be beneficial to the U.S. even with communist states. Yet, I would argue that Castro's regime has an even greater economic stranglehold on its people and businesses. It also lacks China's technology, manufacturing and other industries that American consumers find so attractive.
Moreover, Cuba's people are very, very poor. It's pretty unlikely U.S. exports will manage to capture much of the little money they've got. Most of the stuff we make is expensive. The marginal success the U.S. has had in exporting its goods to poor countries has generally been with developing nations, because they've got more to spend with each day that passes. Cuba is not developing. It's still the 1940s there.
What does Cuba have to offer us? Cigars, yes. But also other agricultural products. They've got sugar, for example. Of course, so does Florida, and so do other South and Central American countries whose politics we probably like a little bit better. Because, other than strange niche crops like tobacco, agriculture is commoditized, there's no reason we need to trade with Cuba instead of any other country for these goods.
So, other than pressure from cigar distributor lobbyists, why would Washington bother to lift all trade sanctions? I can't figure it out. Trade with Cuba does not seem like it would do the U.S. all that much good anyway. That is, unless the U.S. government figures out a way to pay for universal healthcare through taxing Cuban cigar tobacco.
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