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The US Trade Deficit - Research Paper Example

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The main exports from the country include industrial supplies, feed and beverages, machinery and equipment, motor vehicles and parts, aircrafts and parts, non-auto consumer goods among others (BEA). Among the imports of the country, include fuel, non-fuel industrial supplies, production equipment, and machinery. The major trade nations include the European Union, Japan, Mexico, Canada, and China. II. Causes The causes of the US trade deficit lay in the importation of petroleum products and consumer products and autos (Jackson, 2011). The nation’s dependence on foreign oil products is the main driving force of the trade deficit. Importation of petroleum-related products by the US in 2010 was 252 billion dollars, higher from 188 billion dollars in 2009. Worth noting is that the number of barrels imported in these two years is about the same, but the average yearly prices of a barrel rose to 75 dollars form 57 dollars in 2009 (Pitz, 2011). Some of the petroleum-related products include natural gas, fuel oil, crude oil, and other distillates like kerosene. The other major cause of the trade deficit is the importation of consumer products. These products include clothing, furniture, household goods, drugs, and consumer electronics. The available detailed data indicate that the nation imported 253 billion dollars while exporting only 150billion dollars worth of consumer products, thus running a deficit of 103 billion dollars in 2009 (BEA). This was an increase from previous years, even despite

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the inflation and declining dollar. The automotive sector is also another contributor of US trade deficit, with a recorded deficit of 79 billion dollars through the importation of 160 billion dollars of auto parts, cars, and trucks while exporting only 81 billion dollars in 2009 (Jackson, 2011). Nonetheless, the US excels in exportation of services, with a recorded surplus of 148.7 billion in 2009 (US Congress, 2010). The US trade deficits are bad for the overall economy of the country. A consistent trade deficit means that the country’s budget gets finance from debts. This simply means that the US may buy more than it can produce since the other countries lend it the money. A better understanding of the scenario is to consider a party where a drinks supplier is willing to send more drinks and put the bill on your name. However, this may only continue as long as the drinks supplier is able to loan you the money and when there are no other customers. The moment the drinks supplier asks for the money owed, the party crashes. The decline of the value of the dollar also contributes to the trade deficit. Since the dollar has been declining by an average of 40% for the past five years, then it means that the US-made services and goods are approximately 40% cheaper for European and other countries, thus giving the US companies a competitive edge resulting in more exports (US Congress, 2010). Unfortunately, the recent recession has neutralized this advantage, thus the exports recoded a decline of 1.8 trillion in 2008 to 1.6 trillion in 2009, with a similar effect on the imports. Worth noting is the fact that

Summary

The US Trade Deficit Name Institution OUTLINE Introduction US trade deficits Causes of US trade deficits Importation of petroleum products Protectionism Remedies I. Introduction In January 13, 2012, the United States Bureau of Economic Analysis and the United States Census Bureau, through the department of Commerce, reported the total exports in November as 177.8 billion dollars and total imports as 225.6 billion dollars for the month of November 2011, resulting to a trade deficit of 47.8 billion dollars (BEA)…
The US Trade Deficit
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cloyd08 added comment 3 months ago
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The topic of "The US Trade Deficit" is quite popular among the assignments in college. Still, this essay opens a fresh perspective of seeing the problem. I’ll use the manner for my own document.
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