I resisted writing anything specific about Brexit and North Dakota for a time now. Part of the issue was it was all too soon; natural experiments of this scale are not something economists expect to just fall in their lap. There were many questions about the implications of the event for North Dakota, which as we will see is probably minimal in terms of direct relevance. With the benefit of a little temporal distance we can address this in a manner devoid of (some of) the immediate hysteria.

According to Census Bureau statistics about exports from North Dakota, in 2015 the state exported a total of $3.86 billion. The top trading partner for North Dakota was? … Yep. Canada, with a whopping 70.5% of North Dakota exports headed to our neighbors to the North. Mexico came in second place with 7.6%. Third was Australia at 3.5%.

So the UK was not in the top three, but surely they were right after that. Well,… no. You see fourth was the Czech Republic, followed by Spain, Germany, Italy, Japan, India, and Brazil. That rounds out the top 10, so surely the UK comes right on their heels.

Yes, right after Panama, South Korea, and the Dominican Republic. The United Kingdom is actually the 14th in terms of receiving exports from North Dakota with a total value of $19 million. Okay, they are tied with the Dominican Republic so you might say 13th, but we are still talking about 0.5% of total North Dakota exports.

This is actually not too much of a surprise when you look at what North Dakota exports. Crude oil has been a big item, but so are shovel loaders, wheat, track-laying tractors and other items related to either agriculture of extractive industries. The UK has their own firms supplying these needs and has little use for North Dakota in that regard.

So the point is that the direct impact of the UK out of the EU is likely minimal for the economy of the state of North Dakota. In fact, we do more trading with other countries remaining in the EU. So why should we care at all? There are indirect impacts to consider as well.

This event introduced a significant amount of volatility into global financial markets at an inopportune time. We can argue about whether there is even an opportune time for volatility such as this to be introduced at a later date. Sterling got pounded in the currency markets. (I used that line three times the Friday after the vote before people started yelling at me.) Equity markets took a hit, gained some back, dropped again, and so the dance continues. The point is this kind of behavior seems likely to continue for a time. Markets are searching for a new normal and until they find that we will continue to see large responses to all sorts of economic events.

To be honest the political fallout in England has not helped. It is a grand soap opera to be sure and is political theater of the first order, but it is not reassuring markets nor the participants in the markets. Added to this is the fact that this is a presidential election year in the U.S., so matters here were already strained and something close to a raw nerve.

How long will this go on? That’s really difficult to say, especially given the amount of passing the buck going on in the political arena. But to reiterate, the direct impacts on the North Dakota economy should be minimal. The sole exception may be oil, but we need to wait and see how the oil prices react over the next few weeks before knowing any likely long-term directional effects. We all feel the indirect pinch when we look at our retirement statements at quarter end, but again, medium term and beyond this might be sorted out for us at least. What happens in the UK over these next years will be fascinating to watch from my perspective at least.

Census data link: Information used in this post can be found from the Census Bureau website here. Viewed on 5 July 2016.

This work by Flynnglis is licensed under a Creative Commons Attribution-NonCommercial 4.0 International