Topic

US Trade Deficits and BOP

Instructions

Read pages 880-888 of Economics.

Consider the following as you read:

What are the causes and consequences of recent U.S. trade deficits?
What is the balance sheet the United States uses to account for international payments made/paid and for international payments received?

Answer preview

In United States, trade deficit was $502 billion in 2016, as importation of goods and services was $2.712 trillion, against $2.209 trillion worth of exportation (Amadeo, 2017a). The recent occurrence of trade deficit in United Stated is due to several things, including limited production of all that is required to run the country’s economy and when local companies increased their rate of manufacturing in foreign economies (Amadeo, 2017b). One of the consequences of trade deficit includes the plummeting of manufacturing jobs in United States (Scott, 1998). More importation than exportation simply means that the country’s production level is lower, which leads to the need for more imports.

Word count: 395