U.S Trade Deficit With China Reaches $26B in Jan 2020 - Essay Sample

Introduction

In January 2020, the total U.S export to China is $7,215.3 million, and the imports are &33,280.6 million. The difference between imports and exports is $26, 065. 5 million. The implication is that the United States is importing more from China than it is exporting to China. Therefore, there is an unfavorable balance of payment in favor of China in this trade. For December 2019, the exports to China from the United States were estimated to be $ 8,875.1 million, while the imports from China were expected to be $33,668. 4 million. The deficit was estimated to be $24,793.3 million in favor of China. The implication is that in December 2019, China sold more to the United States.

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The United States is not favored in its trade with China since there is a deficit that does not support the United States. Therefore, the balance of payment was in favor of Chinese goods. In November 2019, the total export to China was estimated to be $ 10,103.3 million, while the imports from China were expected to be $36, 468. 9 million. The deficit between the imports and exports in November 2019 was $26 365.7 million. Therefore, in the last reported quarter, China imported more to the United States. Chinese were valued higher than the United States goods in the previous reported quarter. There had been a balance of payment deficit that favored China. When analyzing the trends from November 2019 to January 2020, then it can be argued that there is a decrease in the deficit. In other words, the trends indicate that the United States are increasing their exports to China while the Chinese seem to be reducing their exports to the United States (Bimantara, 2019). The directions also show that China is beginning to accept goods from the United States. Therefore, the balance of trade seems to be leveling between the two countries.

Protectionism is used by countries to prevent exports from other countries. Different economies have used protectionism as a means of protecting their economies. Donald Trump campaigned on the platform of protectionism. In the latest moves, Trump has engaged in protectionism against China. The protectionism against China has had various business impacts on China's goods and businesses (Lee, 2018). Trump's trade protectionism has forced China to increase its purchases of products from the United States. Therefore, China is increasing its imports from the United States. When China increases its imports from the United States, then there is an evident reduction in the balance of payment. The decrease in exports and increment of the imports ensure that the benefits that countries obtain decrease. China has had its advantage from the trade decrease. The protectionism has also sought to control China's internal businesses. Therefore, their internal environment is controlled. The protectionism by Trump has also placed tariffs on Chinese products (Mastanduno, 2020). It has led to an increase in the prices of other Chinese products. In other sectors, the protectionist has led to the investigations of intellectual rights.

A case in point is the Chinese Steele products. The protectionist tendencies of President Trump have influenced steel products. The protectionist acts are having a direct impact on the economy of China (Crowley, Song & Meng, 2017). It is impacting its exports and imports. The protectionist by Trump also attempts to cut down the supply of factors of production like capital. The elements of production include capital, labor, land, and entrepreneurship. However, China can concentrate on local consumption owing to its large population. Therefore, the economy of China is influenced by the actions of the United States. The balance of payment that initially favored China is beginning to flatten.

The Trump's protectionism has a direct impact on the foreign direct investments (Khan, 2017).The current protectionist methods employed by the United States have affected other countries like Canada and Mexico in different ways. First, it has continued to dictate the nature of goods that are entering the United States. Today, the United States has doubled its import tariffs. When import tariffs are increased, then the exports from other countries fall. The case of Canada and Mexico are notably worse since they are in the same economic agreement with the United States. An increase in tariffs is also critical for the products of different countries. Thus, there is a change in the foreign exchange of different countries.

The international financial markets are also affected by the changes in the tariffs. The United States is one of the cornerstone economies in the world. Most countries depend on the United States. Therefore, protectionist tendencies will mean that other countries suffer from their exports to international markets. The most affected sectors are the transport sectors and the machinery sectors. The increase in protectionist activities is witnessed, especially during the rise in customs duty. The countries will have to balance their activities to ensure that there is a knock-on effect on the states. It also affects the energy transport sector that has a direct consequence on the transport sector. Thus, the U.S trade policy follows a protectionist policy that hurts other economies.

References

Bimantara, A. (2019). Donald Trump's Protectionist Trade Policy from the Perspective of Economic Nationalism. Jurnal Hubungan Internasional, 7(2), 189-204.

Crowley, M., Song, H., & Meng, N. (2017). Protectionist threats jeopardise international trade: Chinese evidence for Trump's policies. Financial Times.

Khan, M. (2017). Trump's Protectionist Policies Threaten Rising Foreign Investment, Warns UN. Financial Times.

Lee, S. H. (2018). Trump's Protectionism: What Future for US Trade Policy?.Mastanduno, M. (2020, March). Trump's Trade Revolution. In The Forum (Vol. 17, No. 4, pp. 523-548). De Gruyter.