The trade deficit between The United Stated of America and China
The trade deficit between The United States and China is an economic issue that worries economics and citizens in general. The book “Economics: Principles, Problems, and Policies McConnell, Brue and Flynn” states that the U.S total trade deficit was $539 billion in 2012; if that number is alarming, the trade deficit with China alone was $315 billions. China is the leading country where the United States imports from. There are many economic reasons why there is a huge trade deficit between both countries, and what are the benefits and consequences of the trade between China and the United States. There are multiple reasons why there is a continuously increment in the trade deficit between China and the United Stated. For example, the standard of living of people in China is less compare to the one of the United States. Chinese citizens cannot afford to buy the same quantities of imported good that come from the United States; on the other hand, the standard of living of American citizens is much higher which allows them to buy more imported goods. In addition, the undervalue of the Yuan, Chinese’s monetary currency, is another cause of the trade deficit. China “has fixed the exchange rate of it’s currency”; in other words, even if the value of the dollar goes higher or lower, one dollar will approximately equal to six Yuan. If the Yuan is revaluate to what economics consider the real value of the Yuan, Chinese citizens are going to be able to buy more American goods at lower price and Americans will buy less Chinese goods because the prices will be higher. The government is trying and had tried in the last years to decrease the unbalance deficit between the two countries. The government has tried to minimized the trade deficit by implementing some trade barriers between both countries. For example, during the presidency of George Bush, he implemented measures like adding extensive import duties on Chinese products. In addition, he put barriers to Chinese investors that wanted to invest in American industrial sectors. President Obama also put some high tariffs in some Chinese products, for example he added a 35% tariffs on Chinese-made tires. By doing so, the trade deficit decreases, however, American consumers get hurt by those actions. The result of the trade barriers means higher price on goods and less investment in from Chinese people on American business. The trade deficit has some benefits that may be invisible at first hand. American consumers can benefit from the imports from China. As …show more content…
For example, The United States Census Beau shows the balance of trade with Japan went from -73,358.3 millions in 2013 to -67,176.3 millions in 2014. The same goes to other Asian countries like Taiwan, South Korea, and Singapore. The reason for that being is that more Asian countries are moving their assembly operations to China. In other words, American are importing more from China but less from other Asian countries. So it only makes sense that the trade deficit between China and USA increases over time. Lets not forget that 60% of the goods China exports are produced by companies that are not Chinese; some of those are American companies operating in
The trade deficit between The United States and China is an economic issue that worries economics and citizens in general. The book “Economics: Principles, Problems, and Policies McConnell, Brue and Flynn” states that the U.S total trade deficit was $539 billion in 2012; if that number is alarming, the trade deficit with China alone was $315 billions. China is the leading country where the United States imports from. There are many economic reasons why there is a huge trade deficit between both countries, and what are the benefits and consequences of the trade between China and the United States. There are multiple reasons why there is a continuously increment in the trade deficit between China and the United Stated. For example, the standard of living of people in China is less compare to the one of the United States. Chinese citizens cannot afford to buy the same quantities of imported good that come from the United States; on the other hand, the standard of living of American citizens is much higher which allows them to buy more imported goods. In addition, the undervalue of the Yuan, Chinese’s monetary currency, is another cause of the trade deficit. China “has fixed the exchange rate of it’s currency”; in other words, even if the value of the dollar goes higher or lower, one dollar will approximately equal to six Yuan. If the Yuan is revaluate to what economics consider the real value of the Yuan, Chinese citizens are going to be able to buy more American goods at lower price and Americans will buy less Chinese goods because the prices will be higher. The government is trying and had tried in the last years to decrease the unbalance deficit between the two countries. The government has tried to minimized the trade deficit by implementing some trade barriers between both countries. For example, during the presidency of George Bush, he implemented measures like adding extensive import duties on Chinese products. In addition, he put barriers to Chinese investors that wanted to invest in American industrial sectors. President Obama also put some high tariffs in some Chinese products, for example he added a 35% tariffs on Chinese-made tires. By doing so, the trade deficit decreases, however, American consumers get hurt by those actions. The result of the trade barriers means higher price on goods and less investment in from Chinese people on American business. The trade deficit has some benefits that may be invisible at first hand. American consumers can benefit from the imports from China. As …show more content…
For example, The United States Census Beau shows the balance of trade with Japan went from -73,358.3 millions in 2013 to -67,176.3 millions in 2014. The same goes to other Asian countries like Taiwan, South Korea, and Singapore. The reason for that being is that more Asian countries are moving their assembly operations to China. In other words, American are importing more from China but less from other Asian countries. So it only makes sense that the trade deficit between China and USA increases over time. Lets not forget that 60% of the goods China exports are produced by companies that are not Chinese; some of those are American companies operating in