Question

United States has a large deficit with many of its trading partners; yet, the deficit will continue to exist or may even grow larger in foreseeable future. Discuss why. (Hint: buying power of American citizens compared to citizens of other countries, over-valued dollars, freedom of choice of our citizens allowed by our government.)

Answer 1

There is a large trade deficit but the problem seems to be growing and essentially might become a much larger problem for the American economy. Trade deficit could be attributed to a lot of different reasons which include a country's economic policies, a country's potential market, trade laws and policies and the demand that is created for the imported products. But, the main reason for the deficit is due to the changing policies of the new government. With the president's (America first) policy, it is getting clearer that even though the country's own growth and economic stability is increasing, this has caused confusion and fear in the minds of their trade partner who are feeling jeopardized by the policies being too "perfectionist". What this means is that while it is important for a country to be able to develop their own potential and support their own businesses, trade is getting affected in the process and due to such policies in place, will keep on increasing to a point where it will be uncontrollable in the future without solid changes to the policies.

The problem also remains that freedom of choice for the people have made the population use their own products with the mindset that it promotes their growth and support their local businesses but in the long run have a negative impact on the trade and therefore, since the buying power of American citizens is vastly more than other countries. This creates a huge gap between the use of the goods from another country by the people to a very large extent.