Trade deficit has been a concern for a very long time. It is the total of goods and services that are imported by the United States and is greater than the total it exports. The United States deficit was around $5399.514 billion in 2012, exports in the amount of $2.194 trillion and minus imports of $2.734. The United States depends on foreign oil to drive the trade deficit. Consumer products, drugs, consumer electronics, household goods, furniture and clothing is a large contributor to the trade deficit. In 2012 the United States imported $298 billion worth of trucks, auto parts, and cars, while they only exported $146 billion, which ran a deficit of $152 billion ("US Trade Deficit", n.d., p. 1).
A net exporter of services is the United States, and they exported $630.4 billion and only $434.6 billion was imported. This causes a trade surplus in services of $195.8 billion. Trade deficits weakens the economy, especially over a long period, for it is a debt that is financed. What this means is, the United States buys more than it makes because the countries that it buys from lends them the money.
Key Term and Why I Am Interested In It
Trade deficit is defined as “an unfavorable balance of trade that is the excess of imports of goods (raw materials, agricultural and manufactured products, and capital and consumer products) over the exports of goods, resulting in a negative balance of trade. Factors that affect a country’s balance of trade include the strength or weakness of its currency value in relation to those of the countries with which it trades and comparative advantage in key manufacturing areas”( Trade Deficit, 1995).
I am interested in the term trade deficit because I want to understand how it affects the United States and o...
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... to the debate, and concludes his paper with the discussion of the burden of a trade account deficit.
(Batra & Beladi, 2013) explains that it is well known to that nations that have high trade deficits have higher interest rates than those with balanced trade or surplus. They explain that this is now what has been happening with the United States, which has had a bad trade deficit since 1982. The United States interest rates have been lower than those in several other trade-surplus nations, however the rates did fall even as the trade “shortfall” went up. This generated an interest rate “paradox”. Batra & Beladi, also explains that unlike other nations, the trade deficit that continues to rise is the cause of lower United States interest rates and it happened because of the “world’s strong interest in maintaining a high value of the dollar” (Batra & Beladi, 2013).
Trade is essential to overcome the dollar gap that prevented foreign marketing of United States goods (Melanson and Mayers, 159). There are many economic issues which face the nation at this time. A recovery from World War II and the Korean War, a recession, a change in the political party of the president, and several other issues. Thus, this must be a time of strong economic leadership. The policies made and legislature passed must steer the United States through this apparent storm and give the nation a chance to rest from the hecticness of the first half of the century.
economy. He said " …the tax on imports furnished much of the money for paying
What is the national debt? National debt is how much money the nation owes to states, foreign countries, and any other “creditors who hold US debt instruments” (National Debt vs. National Deficit). The national debt is different from the national deficit, or budget deficit, which is the difference between the amount of money the United States makes and how much it spends on a yearly basis. The budget deficit makes up a significant portion of the national debt .
NAFTA's promoters promised 200,000 new jobs per year for the U.S., higher wages in Mexico and a growing U.S. trade surplus with Mexico, environmental clean-up and improved health along the border. The reality of the post-NAFTA surge in imports from Mexico has resulted in an $14.7 billion trade deficit with Mexico for 1998. By adding the Mexican trade deficit to the deficit with Canada, the overall U.S. NAFTA trade deficit for the year 1998 is $33.2 billion dollars. In the last five years we have gone from a pre-NAFTA trade surplus of $4.6 billion with Mexico to a $14.7 billion deficit. Using the Department of Commerce trade data in the formula used by NAFTA proponents to predict job gains, the real accumulated NAFTA trade deficit would translate into over four hundred thousand U.S. jobs lost.
Sahadi, J. (2013, October 30). Treasury: $680 billion deficit for 2013. CNNMoney. Retrieved January 26, 2014, from http://money.cnn.com/2013/10/30/news/economy/deficit-2013-treasury/
So it is possible that policymakers could be convinced to either open or close trade regardless of the possible ramifications due to contributions that may or may not make up for the possible losses that will be incurred. However, if it is immigration affecting trade policy they should not be considered substitutes, but they should be complements or hold no statistically significant correlation. The examples given; however, show that they are in fact used a substitutes, economically and politically, which rules out the option that immigration is the leading policy that affects trade policy. Closure of trade stances lead to higher wages for low-skill laborers, that then leads to firms encouraging immigration in order to decrease losses they incur from loss of profit due to the higher wages. The next section that Peters addresses is why there is more restriction concerning immigration all around the board despite many differences in border regulation, recruitment,
This is especially prevalent in his January 20th article “What If?” about the economic
The U.S. trade deficit has risen more or less steadily since 1992. In the second quarter of 2004, the trade deficit relative to GDP surpassed the 5 percent mark for the first time. Many economists already considered trade deficits above 4 percent of GDP dangerously high. The fear is that continued growth in this external imbalance of the U.S. economy will ultimately spook overseas investors. http://www.americanprogress.org/issues/2004/09/b193700.html
...es currently does possess an enormous trade deficit, but the importance of this problem and the best means of solving it is a sharply debated issue. Clearly, while a return to protectionist policy would have some positive effects in the short run, it ultimately would undue the enormous growth that free international trade has caused for the US economy. The more moderate approach, of increasing domestic capital, reducing reliance upon foreign money and goods, and reducing government spending, deals with the situation much more effectively. A deficit is often times natural, especially in a wealthy country with a very strong economy, such as the US. Using these techniques, the negative aspects of the deficit can be overcome, while still ensuring the efficiency and affectivity of a liberal international trade system.
History has proven that it is not possible for a country to maintain the internal and external balances which comes from the argument that countries with low labor productivity cannot maintain stable price levels. The problem of low growth rate, the labor productivity sector, and poor foreign trade relations lead to increased external imbalance. The competition between home product demand and commodity export also leads to increased imbalance. It is evident that increased labor productivity results to increased economic growth and that through export of commodities there is a positive labor productivity growth. The issue concerning money equilibrium affects the internal and external balances of trade (Columbus, 2004).
Another economist Douglas Irwin wrote a book titled “Against the Tide”. The book is an Intellectual History of Free Trade; it is an interesting, educational account of how free trade appeared and of how the concept of free trade has coped with two centuries of attacks and criticism.
The main component is trade deficit. A country experiences a trade deficit when it imports more goods and services than it exports. The next most
The following essay aims at highlighting and analyzing the main political arguments for trade intervention and the rationale behind this.
As per Investopedia, “current account deficit is the measurement of a country’s trade where the value of the goods and services it imports exceeds the value of the goods and services it exports”. This means that current account deficit occurs when there is more outflow of money in comparison to its inflow in the country. Bhutan being a small Himalayan nation faces negative balance of trade over the year and according to the Statistical Yearbook of Bhutan 2015 (p.182), the trade deficit of Bhutan amounted to Nu. 31,614.16 million.
International trade allows more competitive pricing market and greater competitors in the market. International trade can affects the economy of the world as dictated by making goods, supply and demand and service obtainable which may not be available to the consumer globally. Import and exports are very important to the international trade. According to Investopedia, an import is where a good or services are brought into one county from another country. The higher the value of imports entering a country, compared to the value of exports, the more negative that country's balance of trade becomes. Meanwhile, Investopedia defines an export is a function of international trade whereby goods produced in one country are shipped to another country for future sale or trade where the sales of those goods will be adds to the nation’s gross output producing. Exports are exchanged for other products or services in other countries if it used for