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United States trade deficit - Essay Example

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Undergraduate
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Macro & Microeconomics
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The existence of a USA merchandise trade deficit since 1980s is due to the existence of a strong economy. This is on the other hand having increased the Americans appetite for foreign goods such as cars, clothing's, TVs and other electronics goods. …

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United States trade deficit

The existence of a USA merchandise trade deficit since 1980s is due to the existence of a strong economy. This is on the other hand having increased the Americans appetite for foreign goods such as cars, clothing's, TVs and other electronics goods. Strong US Dollar that makes U.S.-made products more expensive to foreign buyers also causes the continued trade deficit. Despite its current trade deficit, American economy is viewed as healthier than other world economies that have been mired by worldwide slump. (AP/CBS, Washington, May23, 2003).According to Daniel, the current account deficit is not a problem. The history of U.S economy shows that, the country has been doing well internationally despite the existence of trade deficit. There has been increase in exports during the time of trade deficits. Increase in imports by Americans and craving for more varieties of goods and products from other countries leads to more freedom in consumer choice, hence more efficiency, improved living standard that signals global investor confidence in the U.S. The deficit neither had dragged the economy growth, nor does it costs job losses. Instead it has shown the increased growth rate and reduction of unemployment during this period. (June 11, 1998).The U.S has been advocating for free international trade. Many analysts have argued that, free trade is responsible for the existence of trade deficit that opens U.S markets to foreign products. ...
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