Us Trade Deficit

The united States merchandise stack deficit has grown tremendously over the past twenty years. The most direct agent I can find for this trend is The emergence in the trade deficit in recent years has been collect largely to sluggish demand for U.S. exports and rising demand for imports caused in the first place by capital inflows into the U.S. market, slow economic recoveries in different countries, and faster economic growth in the unify States (Nanto & Lum, 2006). lets first examine the true meaning of the merchandise trade deficit. The merchandise trade deficit is the difference between exports and imports of goods (Sawyer & Sprinkle, 2007, p. 267). It has been predicted that in 2007, the deficit will rise to $888 billion, but then dip somewhat in 2008 (Nanto & Lum, 2006). The flow rate account deficit is a major problem because this may cause a devaluation of the United States dollar (Nanto & Lum, 2006). If this happens U.S. interest rates would have to rise to collect more foreign investment, financial markets could be disrupted, and inflationary pressures would increase (Nanto & Lum, 2006). This is a problem that needs to be addressed or the country as a whole, in impairment of tune concern and citizens, would suffer immensely.

The trend of international investment position of the United States is problematic because the merchandise trade deficit can chiefly be accounted for by trade with China, Japan, Canada, Mexico, and Germany (Nanto & Lum, 2006). The following chart is a representation of the total United States trade in terms of contributors.CountryCanadaMexicoChinaJapanPercentage Contribution to United States Trade 20%12%10%8% (Nanto & Lum, 2006). The current-account balance summarizes a countrys current proceeding with the rest of the world, which include trade, income from international investments, and transfers (Congressional Budget Office, 2004). Therefore the current account balance is directly related to the countrys business cycle. The... If you want to get a full essay, order it on our website: Orderessay

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