Question

The following two websites provide information on the United States’ top ten exports and top ten imports:

http://www.worldstopexports.com/united-states-top-10-exports/

http://www.worldstopexports.com/united-states-top-10-imports/

Examine each website carefully and compare and contrast the exports and imports to deduce conclusions on the United States’ areas of comparative advantage and disadvantage.

Which generalized products are our country’s principal exports?

Which generalize products are our country’s principal imports?

What is the latest trade surplus/trade deficit numbers?

Answer 1

1) International trade theory predicts that a country can always benefit from trade if it produces the products in which it has comparative advantage. Note that the US economy has comparative advantage in

1. Medical, technical equipment:
2. Plastics

This is so because it earns a net income when it exports and imports them.

Similarly, the US economy has comparative disadvantage in

1. Machines, engines, pumps
2. Electronic equipment
3. Aircraft, spacecrafts
4. Vehicles
5. Furniture, lighting, signs
6. Organic chemicals

This is so because it pays a net amount when it exports and imports them.

b) Principal exports are:

1. Machines, engines, pumps: US$205.8 billion (13.7% of total exports)
2. Electronic equipment: $169.8 billion (11.3%)
3. Aircraft, spacecraft: $131.1 billion (8.7%)

Principal imports are:

1. Electronic equipment: US$332.9 billion (14.4% of total US imports)
2. Machines, engines, pumps: $329.3 billion (14.3%)
3. Vehicles: $283.8 billion (12.3%)
4. Oil: $201.2 billion (8.7%)

c) Since last two years, imports exceeds exports in almost all items which implies that the economy is running a trade deficit. American exports amounted to $1.51 trillion during 2015 while American imports amounted to $2.31 trillion, so the trade deficit is $0.8 trillion.