United States Trade Deficit

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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.


(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. 1However, Daniel, disagree, according to him, free trade will lead to improved living standard, more appeal to the foreign investors to U.S markets hence increase job opportunities and capital growth.

The current trade deficit is characterized by increase in exports accompanied by five-time increase in imports. There are higher demands for foreign products than what is exported out of the country. This means there is low saving and high investments. ...
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