A nation that possesses strong industry, a favorable trade balance, and a lack of dependency upon foreign states is optimum. This ideology is one that has been strongly advocated throughout America’s existence, by politicians from Alexander Hamilton to Pat Buchanan. When a nation faces a trade deficit, it means that competing states are producing more efficiently, and ultimately making profiting. Also, a deficit means that industry and jobs, which could exist domestically, are being “stolen” by foreign nations. According to mercantile policy, this is a zero-sum game; when a competitor is winning, we are losing. The United States faces this situation, having evolved from the world’s largest creditor nation during and following World War II to its current position as the world’s largest debtor. Because America imports much more than it exports, an additional 600 billion dollars is needed every year to balance the equation. This money is “borrowed” through the sale of government assets, sometimes to domestic investors, but increasingly to foreign ones. Many circumstances can be blamed for this situation: cheap foreign labor, foreign government subsidy, and closed foreign markets, among others. The question therefore arises: how to negate obstacle...
... middle of paper ...
...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.
1. Griswold, Daniel. America’s Maligned and Misunderstood Trade Deficit, http://www.freetrade.org/pubs/pas/tpa-002.html
Balaam, David. Introduction to International Political Economy, Upper Saddle River, New Jersey, Pearson Education, 2005.
Need Writing Help?
Get feedback on grammar, clarity, concision and logic instantly.Check your paper »
- Introduction: These days, almost every country is involved in international trading. To set the basic knowledge about international trading, there are two important terms: trade surplus and trade deficit. Trade surplus is when the money amount of export exceeds import, and trade deficit is when trade import exceeds export. U.S. has been stuck with trade deficit for years now and it has caused problems such as lowered U.S. credit, or less favorable trade condition. This is a very complicated problem that it may take long to resolve the problem, but it is not something that is impossible to solve.... [tags: exports, credit, goods]
613 words (1.8 pages)
- In 2001, China entered the world trade organization, it has impacted America in both a positive and negative way. Deficit is the quantity by which expenses surpass earnings or prices. The deficit fundamentally denotes the differences concerning currency entries and losses. In the year of 2013, the U.S. trade deficit with China was estimated to be $318.7 billion. By the end of the year in 2013, the U.S. trade deficit rose to nearly $477 billion. According to Kimberly Amadeo, the deficit continues to rise due to imports increasing earlier and faster than all exports.... [tags: United States, Unemployment, United States dollar]
817 words (2.3 pages)
- In November of 2004, the United States ran a fifty-four billion dollar trade deficit, translating to over 600 billion for the entire year. This deficit is a result of the disparity between the amount of goods that the US imports and the amount it exports. To equalize this deficit in its current account, the American government sells assets from its capital account, often to foreign investors. This phenomenon is seen as a serious threat to the success and continued growth of the nation’s economy, tied in with popular concerns that the United States is losing its competitive and dominant edge in global economics.... [tags: essays research papers fc]
1479 words (4.2 pages)
- “Made in China” is a label we can find nearly every product in the U.S. consumer market, furthermore the world market. The products that are made-in-China replaced the made-in U.S.A. gradually and nowadays it is hard to find the products which are not made in China, anywhere in the world. The biggest supporter of the growth in Chinese economy and the National power is the U.S unintentionally. China was able to take over world’s processing industry because America was the one gave up the industry.... [tags: trade deficit, market, export, import]
1243 words (3.6 pages)
- Analysis of the US-China Trade 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 The United States and China share the most imbalanced bilateral trade relationship in the world.... [tags: Trade Deficit Economics Analysis China]
1570 words (4.5 pages)
- If the United States government allowed the exportation oil and natural gas to any and all countries what impact could this have on the U.S. trade deficit. If the government lifted the policies what would be the positive and negative impacts. The U.S. has consistently been experiencing a trade deficit since the late 1990s with no signals or indications that we will reach a trade balance. Energy, particularly oil and gas, has been the one of fastest leading export for the United States since the shale boom of late 2009 “.... [tags: policies, exporting gas, trade deficit]
1511 words (4.3 pages)
- The US & Global Economic Trades Change is a constant. The ability to change at a rate greater than or equal to that constant helps separate successful companies and countries (Kotter, 2012). The US and South Korea serve as examples of countries that have underwent transformational changes the last 50 years. While the US continues to become more specialty oriented, South Korea has completely reinvented itself from the depths of economic futility ("South korea’s education," 2013). While the US GDP has slowed, it remains a highly sought after trade partner (in part due to consumption and economic well-being).... [tags: GDP, human capital, trade deficit]
1100 words (3.1 pages)
- 1. Is a current account deficit something to be avoided. Explain. A current account measures trade, international income, direct transfers of capital, and investment income. A current account deficit occurs when a country imports more goods, services, and capital than it exports. It creates a reliance on foreign parties for capital. A current account deficit isn’t necessarily something to be avoided – it can be a sign of economic growth, or a sign that the country is a credit risk. There are multiple components of a current account deficit that should be taken into account when assessing each case.... [tags: Economics, International trade, Investment]
1541 words (4.4 pages)
- Since the early 1970’s, Americans have had trouble controlling a huge money issue. The United States government has engaged in deficit spending. This occurs when spending exceeds the amount of income taken in (“Budget”). American politics have been trying to come up with ideas that the government can implement to fix our current deficit issue. Some strategies that the government may use are spending less, collecting more taxes, and balancing trade (“Atkins”). The federal deficit has become a big issue and Americans must try everything to reduce the debt.... [tags: government, spending, trade]
597 words (1.7 pages)
- Businesses and workers have long thrived in the international economy. In recent years some countries have implemented national trade policies that unfairly favour their workers and companies; this is where fair trade agreements are introduced. Free trade helps create a more level playing field for national businesses and workers to succeed. Trade within the group is duty free but members set their own tariffs on imports from non-members (World Trade Organization, 2015). These agreements create a more accountable and fair trading relationship between two or more countries.... [tags: International trade, Free trade]
1302 words (3.7 pages)