Kaknika VisetMr.

KeeferAP GovernmentJanuary 11th, 2018Preposition On Global TradeThis bill is to only make trade that benefits both sides of the countries. The balance of trade compares the value of a country’s exports of goods and services against its imports. When exports are greater than imports, that’s a trade surplus. When the value of imports outweighs the value of exports, that is called a trade deficit, which is an unfavorable trade balance. In 2016, the trade deficit was $504 billion in the U.S.

The U.S only exported $2.209 trillion, while importing $2.712 trillion of goods and services. That amount of shortfall is significant enough to try and decrease the gap. The primary trading partners with America is China, Canada, and Mexico. The trade deficit with China is $347 billion, which makes them responsible for 70% of the U.

S. deficits in goods; the other trading partners isn’t as costly. If this type of trade keeps going, the nation’s economy will be in more debt than we already are. The United States can only borrow so much from its trading partners until the lending countries ask to repay then it will be the end. To put this bill into action, increasing the national savings rate would have to take place. A problem would be that a higher savings rate would lead to a lower United States standard of living, which many politicians would not be in favor of because of the thread of not getting reelected. The Congressional Budget Office, or the CBO, agreed to that this was preferable to drawn-out dollar decline and the risk of a sudden dollar collapse as of 2007.

Despite the arguments, some experts also say that the U.S economy will prevent any horrific crash and that all lenders would assist the U.S economy because they know that if America goes down, so will they. Those experts do realize that at some point, other countries will stop lending the U.S money, but they expect the process to be stable and have little negative impact due to other factors. The factors are the global stock market is becoming more open, Latin American and South East Asian countries are more open to investment, and the U.S.

Senators is pressuring China to raise its currency allowing America to become more competitive, which means the U.S is better than the competition in the customers’ minds. Overall, the CBO warned that even a gradual decline would lead to a lower U.

S. standard of living, and it would drive up interest rates and create inflation.