The United States as of now is experiencing a massive trade deficit. The country currently imports much more than it exports to the foreign market. Specifically, America has a strong reliant on China for its manufacturing. It receives nearly $506 million in goods from the Asian nation compared to the U.S.’ significantly lower $130 million in imports (Amadeo). Some like President Donald Trump see this as a problem to the industries at home. In March of this year, he announces trade barriers on China as a way to combat the trade imbalances. He proposes tariffs on specific Chinese goods like steel and aluminum to possibly limit their purchase and hopefully promote American businesses. While the trade barriers’ purpose is valid, Trump’s trade …show more content…
A trade war is a series of responding trade barriers between nations. For the most part, a trade war between the United States and China will harm all parties involved. If the president enforces tariffs, Chinese exports will fall, but the act will also result in China reciprocating, enacting its own trade barriers against American exports. This will significantly impact U.S.-located companies and manufacturing plants. Many American businesses such as Boeing and Tesla have a large market in China, and some foreign companies like German automakers BMW and Daimler assembly goods in the United States in which they will then sell to China (Bomey). For China to establish trade barriers in response to Trump’s policies will mean making exporting to the country more expensive and therefore hurting businesses and the U.S. economy. Yet, while a trade war can prove detrimental to America and China, it presumably can help other trade relationships. With trade barriers, China will not be able to export and import as freely with the United States so other countries can fill in. There are other nations that can supply America with the goods it will be lacking -such as soybean from Brazil and Argentina- now that trade with its main provider is limited (Turak). Trump’s policies could cause a trade war with China which will not be beneficial for the U.S. economy but can give an …show more content…
Such harmful trade barriers include tariffs and quotas. Enforcing a tariff means charging a tax on goods coming into a country. As mentioned before, President Trump plans to apply tariffs to a great number of Chinese exports in the hope of protecting domestic industries. However, in attempting to stimulate economic growth, the president might cause more outrage in consumers when the prices of goods go up. A tariff is an extra addition to the input cost of imported goods and thus, in order to continue making a profit, China must raise the prices of their goods. Items like home appliances and machinery parts -which are needed for the final production of other goods- will be more expensive for people to buy (Horowitz). This leads to the question of whether tariffs, with their promise of job creation, would do any good if it also raise prices. Quotas have a similar effect. A quota is a limit on the amount of products imported. To place a quota on Chinese goods would mean significantly lowering the United States’ overall supply of goods, driving prices up. China is a manufacturing giant that cannot be fully replaced by the industries at
When people in America see foreign goods for outrageous prices and then they see American goods for normal prices, they are going to buy American products. Unfortunately, this is not the only effect of a protectionist policy. Foreign nations often get upset at the increase in American tariffs and respond by increasing their own tariffs on American goods. This weakens the sales of American goods to foreign nations. In order for the United States to have a favorable balance of trade, then they must have strong exports.
The current trade imbalance is caused in large part by intrinsic features of China's labor market and consumer base. The vast majority of China's 1.3 billion people still live in rural areas. China has, by some estimates, a surplus rural labor force of 120 million people, many of whom migrate to industrial centers to look for factory work, and drive down wages. As long as wages are low, the United States will continue to gobble up products made in China, while Chinese consumers will prefer to buy cheaper, homespun alternatives to American products. The rise in trade deficit with China has come at a cost to jobs in the United States, accordin...
Throughout history, the United States has initiated policies, peace agreements, or laws which were believed to bring prosperity, and success, however those policies as a result were created in the U.S. best self-interest. One of these policies is known as NAFTA, which was a trade agreement created to open up free trade around the globe, however this policy backfired, deeply scaring and deteriorating the Latin American economy, and its people. Specifically, NAFTA known as the North American Free Trade Agreement, took effect on January 1, 1994 was a treaty which entered by the United States, Canada, and Mexico used to eliminate tariff barriers, in order to encourage economic prosperity between these three countries. A quarter century later, the
In December of 1992, Presidents Salinas (Mexico), Bush (U.S.) and Prime Minister Brian Mulroney of Canada signed the North American Free Trade Agreement (NAFTA). The Mexican legislature ratified NAFTA in 1993 and the treaty went into effect on January 1, 1994, creating the largest free-trade zone in the world.
The United States has for over two centuries been involved in the growing world economy. While the U.S. post revolutionary war sought to protect itself from outside influences has since the great depression and world war two looked to break trade restrictions. The United States role in the global economy has grown throughout the 20th century and as a result of several historical events has adopted positions of both benefactor and dependent. The United States trade policy has over time shifted from isolationist protectionism to a commitment to establishing world-wide free trade. Free trade enterprise has developed and grown through organizations such as the WTO and NAFTA. The U.S. in order to obtain its free trade desires has implemented a number of policies that can be examined for both their benefits and flaws. Several trade policies exist as options to the United States, among these fair trade and free trade policies dominate the world economic market. In order to achieve economic growth the United States has a duty to maintain a global trade policy that benefits both domestic workers and industry. While free trade gives opportunities to large industries and wealthy corporate investors the American worker suffers job instability and lower wages. However fair trade policies that protect America’s workers do not help foster wide economic growth. The United States must then engage in economic trade policies that both protect the United States founding principles and secure for tomorrow greater economic stability.
Where these items are still at the forefront of the Trump administration's domestic policy plan, and still hold the same “America First” rhetoric they have implications when it comes to foreign policy. The “America First” slogan also applies to the “America First” foreign policy plan in which the focus of all foreign centers on securing American interests and maintaining American security (The White House 2017). Trump's executive actions involving trade and immigration domestic policy plans have the ability to undermine economic growth by negatively affecting foreign policy in the long term. We see that the Trump administration's goals to bring stability, money and jobs back to the US are inherent in all of his orders but at what cost. This could also make his other executive orders surrounding that involve the “America First” rhetoric such as rebuilding the American military and defeating ISIS and other terrorists groups more difficult. It is hard to align to save our country when you alienate other countries that you need assistance from. It is his underlying goal with these actions to increase peace and diplomacy but limiting trade and immigration could not only damage foreign relations but also reduce the amount of people who would be considered experts in their field from joining this initiative
In my opinion, there really isn't any reason to block/terrif imports unless they are illegal items. Some have good intentions but end up causing more harm. For example, the book says on page 427 that if there were a terrif on tennis shoes thus increasing the price of tennis shoes from $30 to $60, it would help the tennis shoe business. But, now there will be less demand for shoes because of the high price, and the company would have to lower the price to attract customers. It might even have to decrease the price all the way back down to $30. Since labor wages are a lot higher in America, they might not be able to afford to stay in business because of the lack of sales. The only way for this to be solved would be to move over to China, therefore
The massive increase in the Chinese trading relations was fueled by the United States in the year 1979 through the normal trade relations between the two countries. In addition, the Chinese non-concession to the World Trade Organization (WTO) in the year 2001 also facilitated its trading activities with different countries including the United States (Kaplan, 57). However, trading relations with the Chinese have been uneasy resulting from the massive trade imbalances in the recent past, which grows exponentially. The protectionist policies of the United States especially in Washington and Beijing have been putting pressure on the Chinese to revalue their currency as well as protecting it from counterfeits, which may be of adverse effects to the trading relations. This paper gives a comprehensive discussion on the foreign trade relations with china. It further gives an elaborate discussion on the impacts of foreign tr...
The World Trade Organization has outlawed import quotas on manufactured goods. Recent trade negotiations proposed that countries convert quotas into tariffs (148-149). There is also a global quota which permits x number of goods to be imported but doesn’t restrict who or where the import comes from and a selective quota which is specific in number and country (149).
...es currently does possess an enormous trade deficit, but the importance of this problem and the best means of solving it is a sharply debated issue. Clearly, while a return to protectionist policy would have some positive effects in the short run, it ultimately would undue the enormous growth that free international trade has caused for the US economy. The more moderate approach, of increasing domestic capital, reducing reliance upon foreign money and goods, and reducing government spending, deals with the situation much more effectively. A deficit is often times natural, especially in a wealthy country with a very strong economy, such as the US. Using these techniques, the negative aspects of the deficit can be overcome, while still ensuring the efficiency and affectivity of a liberal international trade system.
Have you ever been laid off due to your company relocating to China? Are you fed up with the United States losing jobs and large companies to China? Would you like to see more money and products being produced in the United States? The United States trade deficit with China hit all time highs. It's time to fix these problems, it's time to bring wealth and jobs back into the United States. There are many proposals introduced throughout our nation to solve theses issues, but I believe only one will work. Implementing tariffs on China is economically smart, it would help bring more money in to the United States, and help create more jobs.
Trump’s plan to lower trading with foreign countries has its benefits as well as its consequences. Trump wants to bring back certain companies to America that way job opportunities will increase for Americans. However, trading the foreign companies actually boost the economies money worth and it allows America to have strong allies with its countries. China is one of Americas largest trading country and is considered one of the most powerful in this world so, if Trump tried to interfere with its trade it could cause many problems and a possible war. Frankly, the idea of trading with foreign countries is a positive effect and shouldn’t be stopped because if America stops trading it will halt our advancement in technology and
One of the most cited arguments for intervention is that of protecting jobs and industries from unfair foreign competition (Hill). While industries like aerospace are protected given their importance for national security, job protection appears as a result of unions and industries putting political pressure given the threat of more efficient foreign firms (Hill). Many countries achieve this by increasing the tariffs on imports of foreign products. What really happens when a certain industry is ...
Protectionism, although it seems a perverse barrier to the development and equitable distribution of goods, ensures, especially in developing countries, that local products are able to compete with large productions and subsidies offered by exporting countries (Stein, 2016).
Embracing the concept of free trade means that a government does not influence the trade by imposing sanctions but rather has a laissez-faire approach that allows the international market to decide which product has the comparative advantage. The global economy runs on this assumption but not all “play” by the same rules. The United States has limited sanctions imposed on free trade, allowing the free market to operate across the world. The United States’ approach to free trade is much like our approach to the US Olympic Team. Our athletes are unpaid volunteers that often fund their Olympic quest with sponsorships. As our metal count often shows, you do not always “win” ...