Essay Example on US Trade Deficit: Causes & Effects

A trade deficit means the gap between the exports and imports of goods and services among the countries involved in the trade partnership. This difference is investigated by the state to suit itself with the worldwide trade and also to determine trade imbalance amongst themselves. The trade deficit of a particular country may be estimated by subtracting all the exports goods and services from the imports goods and services. The paper will, therefore, discuss the reasons why the United States of America is considered as the nation with the larger trade deficit as compared to other countries.

Is your time best spent reading someone else’s essay? Get a 100% original essay FROM A CERTIFIED WRITER!

Save 25%

Firstly, the larger trade deficit, as viewed in the United States, is because the country is enjoying a trade partnership between countries such as China, Canada, and Europe. As a result of this trade relationship, the country is exporting a large number of products which is consists of some of the products from its trade partner hence leading to the higher trade deficit in the country. Also, the larger trade deficit is influenced by some of the factors such as banning of the war against trade by President Donald Trump which in turn enables the country to export more goods than the importing it into the country leading to the economic development. Because of the elimination of war trade by president Trump, this also shows a rise in the trade deficit as it has led to higher competition between its trade partners such as Beijing and China. President trump has also contributed to enhancing of the larger trade deficit in the United States of America by enacting some policies which are related to the economy of the country (Alden, 12). These policies are beneficial to the citizens since it is about the tariff cuts application to the imports custom duties by the state.

Under the leadership of president Trump, he had manifested larger trade deficit in the country by ensuring that in any case of trade partnership, there must be some money left aside after exporting of certain commodities. Moreover, President Trump has made the United States of America to be recognized as the nation with higher trade deficit through the acquisition of more trading items as compared to the existing resources in the country hence eliminating the gap between the export and import (Baker, 17). President Trump has also aided in the country's larger trade deficit by levying taxes on the imported goods from its trade partners such as Canada, China, Mexico, and Europe. These imports include; washing machines, solar panels, steel, and aluminum. The levying of taxes upon the imported goods has made the country to have more exports than the imported goods hence higher trade deficit as compared to other countries. Also, it has helped in promoting the issue of trade imbalance, which has been a threat to the economy of the country.

Furthermore, the larger deficit in the United States is contributed by the reluctances of China from importing of goods into the country. As a result of this slow import of goods and services into the country, it has created suspicion of American goods and services among the consumers. Also, the more massive trade deficit in the United States of America has been caused by the issue of trade currency, especially among the people who are involved in the act of trading. Due to the existence of trade currency throughout the country, it has made the United States traders to purchase the imported goods rather than their goods and services, for instance, those goods from China. Also, the manifestation of the higher trade deficit in the United States of America as compared to other nations is because there is a group of personnel who had open their bank accounts to invest their money. This idea of foreign investment has negatively impacted the United States residents because the other people from outside would tend to take advantage of them by investing their wealth in the country hence going against their dreams.

The more significant trade deficit in the United States of America is caused by ceasing of the Chinese traders from buying State goods such as liquefied natural gas and soya beans due to the disagreement over US dollars (Irwin, 24). Chinese view Us dollars as a challenge to their trade because they cannot easily afford it since their value is firm by the market prices and more so the government. The United State is portrait as the nation with larger trade deficit because there is the issue of the tax cut. The tax cut has enabled the country to purchase more goods from outside the country as weighed to what they possess. Also, due to the introduction of tax cuts, it has helped the United States as it is used to aid the budget of the country, especially those concerning the budget deficit within the country.

Conclusion

In conclusion, the trade deficit within a given country may leave a ga, especially when dealing with economic prosperity. Also, trade deficit acts as a measure of the economy of the country since it is used in estimating the value of imports against the exports.

Works Cited

Alden, Edward. Failure to Adjust. Rowman & Littlefield Publishers, 2017. Internet resource.

Baker, Dean. Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer. 2016. Print.

Irwin, Neil. The Alchemists: Inside the Secret World of Central Bankers., 2014. Print.