trade deficits

● America's Trade deficits

● Over the last couple of years, the USA's trade deficit amounts reached 1 trillion dollars and that 1 trillion dollars is 4% of the entire US economy we owe to somebody else. In addition, or trade deficit is in goods trade only meaning we are experts in services like legal and financial services which feeds the trade deficit.

● sources of the deficit

● A lot of things can contribute to the trade deficit but they are only three sources that are important to note. One source outside of the three that are important to note is the well-being of Americans purchasing more goods everyday. The top three sources of trade deficits are:

● Shifts in comparative advantage - compared to advantage is not a stable concept; comparative advantages are not always the same.

● Currency values - The dollar bill being stronger means that America's services and goods are not cheap for other countries to purchase like China. For example, in the past, Beijing has kept their currency low compared to the dollar so their products they produce at a lower price is cheaper for Americans to purchase. Therefore, it's a natural result that America doesn't make a lot of manufactured and consumer goods it used to make because the US decided to go from a agrarian labor prosperous economy to a capital elite rich economy doing things like high-end development and research like silicon valley and strong financial services and this is why we are one of the global leaders in manufacturing pharmaceuticals.

● Trade law - there's a well-known argument from the White House for many years stating that trade agreements like NAFTA and the World Trade Organization are not fair to the USA and that submitting the government to harsh trade rules stops the US from shielding its market from increasing tariffs. So if the US is forced to abide by trade rules then that's going to hurt American firms.

● Some people argue the consequences of this trade deficit is low job opportunities and income and jeopardizes national security. Some also say The international market forces are working the way it's supposed to be working because America just does not produce as good goods as other countries do. They even say the trade deficit is improving our quality of life because the goods that we import are cheaper with access to a lot of variety of goods. The deficit also exposes America's success in their economy meaning if they have a thicker wallet, they have the ability to purchase more things or imported goods at the store. Finally, economists things is important for us to know that we all run a trade deficit with our domestic grocery store; we hand over capital to the grocery store for some goods.

● policy impact

● Fear over trade deficits has caused:

● Renegotiations over trade deals like the North American free trade that connects the United States to Canada and Mexico

● An increase on tariffs in other countries and cuts off countries like the European Union because the assumption is they are importing goods to us at prices that are under selling American producers

● A cut on domestic tariffs to encourage Americans to spend more locally

● Avoid international trade law

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