The Impact Of International Trade On The United States

Good Essays
International trade and the impact it has on the United States is seemingly always argued about. Politicians, corporations, and people in general all try to argue whether trade has a positive or negative impact on the United States. However, as the 5th principle of economics states, trade can make everyone better off, including the U.S. In trade there will always be winners and losers but this doesn’t mean that at times it helps and at other times it hurts the U.S. People rarely notice the winning side and focus more on the losing side, which is why it may seem that the U.S. is negatively impacted. Although, the reality is something completely different.
The U.S. is actually the 2nd largest exporter economy. In 2015, the United States biggest
…show more content…
Differently from the situation with exports, consumers are the winners and the produces are the losers. The United States in this situation does not have the comparative advantage and previously had a higher world price. As a result of once having a higher world price, suppliers had to lower their prices. This decline negatively affected the producers as they lost their consumers because people were able to import the same product at a cheaper price. The consumers on the other hand, were affected positively as they were able to buy these goods at a lower price than before. In this situation although corporations would like you to believe otherwise, trade is still advantageous for the U.S. because the gains of the winner still exceed that of the losers. This is rarely felt though as usually the gains are spread more thinly. Corporations being the losers in this situation may lobby to have people believe this situation is a negative one but it is not.
International trade no matter if it is exporting or importing is supposed to be beneficial for everyone even if there are winners and losers. However, government intervention can affect the results. These things at this moment are quiet important when talking about trade because the 2016 presidential nominees and their stance on trade can change future international trade for the
…show more content…
He believes countries like Mexico and China have “cheated” the U.S. Trump as a way to stop other countries from abusing the U.S. plans on implementing massive tariffs on things the United Sates imports from other countries, like vehicles. Trump states that he would call the president of Ford and tell him that “every car and every truck and every part manufactured [in Mexico]… [is] going to charge[d] a 35-percent tax”. He explains his reasoning for tariffs like this one by stating that it is to defend American jobs. However, tariffs will actually negatively affect the economic well-being of the United States. A tariff like the one spoken of will only help domestic producers as they will now be willing to increase production as the tariff makes it profitable even if the world price does not. The government also wins as they now can gain money they previously weren’t able to. On the other hand, consumers lose out as they must now pay more money. Meaning tariffs aren’t a good thing and instead affect the economic well-being of the country. His reasoning for a tariff in order to stop unemployment is also flawed because unemployment does not rise when imports

Related Documents

  • Decent Essays

    The abundant factor price will rise increasing the profit of said economy. But a scarce factor will decrease in price in order to compete with another states abundant factor which in turn will hurt that economy. This means that any individuals involved in that factor will be significantly hurt and may not be able to compete. Because the TPP throws out the ability to put quotas or tariffs on the scarce factor, there is little that can be done to help the scarce economy. For instance, the United States has high amounts of land and capital but not unskilled labor, abundant factor.…

    • 1054 Words
    • 5 Pages
    Decent Essays
  • Decent Essays

    The Gold Standard

    • 1510 Words
    • 7 Pages

    Under the Gold standard no sort of inflation like this would happen. However, inflation might not always be bad for the economy. John Maynard Keynes saw slight inflation is actually good for the economy in the long run. Stating that if the prices and constantly rising, consumers are more willing to purchase goods than if they were constantly falling. This lack of consumption would then adversely effect the Aggregate demand, aggregate supply, as well as working producing non essential goods.…

    • 1510 Words
    • 7 Pages
    Decent Essays
  • Decent Essays

    Because of this, they will not easily be able to compete with other rich countries when they are selling their goods to foreigners. By having a fixed rate, they can have their currency cheaper on purpose. This makes it easier to sell their goods to a foreign country cheaply and make money. This makes it more expensive to import things too, which means that people will choose to buy things from domestic suppliers. This therefore helps the country’s economy to have more employment (Rebelo and Végh Gramont, 2006).…

    • 1997 Words
    • 8 Pages
    Decent Essays
  • Decent Essays

    From the business point of view it is important to understand that outsourcing is part of globalization, and it benefits the company’s efficiency and it saves money in labor. Many Americans believe that outsourcings hurt Americans economy and are against the idea of taking Americans jobs to other countries. Bryson, a global economist for Wells Fargo said: “When jobs move from a factory in the South to one in Guatemala or China, it certainly has a negative impact on that community in the short run…But in the long run it makes things more efficient." (Hargreaves, 2012) And in fact it might make things more efficient for the company because it is relatively easier to establish a business in China than in the United States, however it is inedible to ignore the impact in American workers. “Over the past decade data from the United States Department of Commerce show that U.S biggest companies that employ a fifth of American workers reduced their work forces by approximately 3 million jobs while increasing employment overseas.…

    • 1324 Words
    • 5 Pages
    Decent Essays
  • Decent Essays

    Did they take globalization to far or did the pros of creating jobs and business in the country outweigh that dilemma? Efficiency was definitely served in my eyes although in an unethical way, but then again to them it doesn’t affect them so why stop it if it only affects a country who is already struggling. What I think of the ongoing debate towards globalization is that something must be done. Something must be done because the disadvantages and advantages are to separate and one defiantly outweighs the other by a great deal. If we glimpse back Nike created poor working conditions, created poor wages, created thousands of American jobs to be lost all for a consumer to save a couple dollars on a product and generate a dramatic profit for the company.…

    • 815 Words
    • 4 Pages
    Decent Essays
  • Decent Essays

    A tax also forces the consumer to pay a higher price then they would have without the tax and the producer to sell less of a product then they would have without a tax on the product. Taxes also create deadweight loss where there is more demand than what is being produced. This means that without the presence of a tax that the market would supply what was being demanded rather than producing an amount below that because of the increasing marginal cost due to the tax. All in all free trade is good for the economy because it increases trade which is always mutually beneficial to both sides of the exchange. In addition to trade being mutually beneficial to both sides of the exchange increasing worldwide trade would help to decrease the opportunity for armed conflict to arise, as evident in Europe.…

    • 1492 Words
    • 6 Pages
    Decent Essays
  • Decent Essays

    It might sound different, but a strong currency necessarily does not serves in a nation's best interests. Today value of one dollar is equal to sixty seven rupees. If India wants it could bring down the value of dollar in comparison to rupees by tweaking its economic policies, but this will reduce India’s profit which it earns from various sources such as IT exports, FDI, Tourism etc.Therefore, India does not appreciates its currency. A country’s weak currency makes its exports more competitive in the international markets, and the imported products more expensive. Higher export volume encourages economic growth and lower value of domestic products makes consumers behave rationally and give preference to local alternatives in comparison to imported one.…

    • 1747 Words
    • 7 Pages
    Decent Essays
  • Decent Essays

    Moderate decreases in tariffs are good to keep competition alive and well, but these drastic reductions can spell trouble for the US. However, from a manager’s point of view, this is a deal that can work well for them in multiple facets. Cost saving is a big one with the cheaper labor cost potential. But the biggest gain is the ability to trade and expand your company globally with little to no trade barriers. There are highs and lows with free trade, but concerning the TPP, it is a great deal for businesses, and a risky deal for the US government in growing and sustaining more…

    • 966 Words
    • 4 Pages
    Decent Essays
  • Decent Essays

    Earlier in the class we discussed the advantages and disadvantages of free trade. We concluded that benefits of free trade outweigh its drawbacks and that our society would ultimately be better off with free trade. Yet most people are against this idea and believe that we should protect our domestic production by implementing trade barriers such as tariffs and quotas as well as canceling the existing regional trade agreements. In the article we see how presidential candidates use this matter as a leverage to win people’s votes. A tariff or a quota on a certain good will increase the domestic production of that good.…

    • 778 Words
    • 4 Pages
    Decent Essays
  • Decent Essays

    International Trade Policy

    • 1283 Words
    • 6 Pages

    The initial trade policies were successful increasing trade by lowering tariffs. However, when all the tariffs had been lowered to a minimum, countries still wanted to increase trade through trade policies. The countries started to form exclusive deals with shady provisions. As the time went on the policies grew more complex, and yet had no significant supervision. Today this policies wreak havoc on the countries involved by exporting decent-paying jobs to countries with very low wages.…

    • 1283 Words
    • 6 Pages
    Decent Essays