Trade Gap Defies Expectations :: essays research papers

Abs nerve tractMost economist view allot as an integral part of the reconcile market system. The United States economy is soon running a trade deficit, an superfluity of imports over exports. The U.S. trade deficit widened much more than expected in June. The whole topic of trade essential be viewed from a total picture, not just a segment or portion of the issue. This paper will analyze the authoritative authority of the trade deficit and some of the factors that have caused the gap to expand. Trade Gap Defies ExpectationsIntroductionMost economist view trade as an integral part of the free market system. Trade allows specialization and division of labor and thereby promotes technological growth (Colander, 2004, p. 414). The United States economy is currently running a trade deficit, an excess of imports over exports. This shortage is currently being financed by the selling of assets such as stocks, bonds, and real estate. The balance of trade has been in a deficit position since the 1970s and will probably continue in this direction for quite some condemnation, since the assets of the United States total many trillions of dollars (Colander, 2004, p. 416). This paper will analyze the current position of the trade deficit and some of the factors that have caused the gap to expand.Trade DeficitThe U.S. trade deficit widened much more than expected in June (Reuters, 2004). This join on was due to a large drop in exports, the largest in three years, and a record level of imports. In fact, exports fell 4.3% which represents the largest decline since September, 2001. During this same time period, imports climbed 3.3%. This increase is partly due to the run-up in oil prices the highest since March, 1982. Not only did prices increase, but the quantity of crude imported rose as well. The chief(a) trading partners of the United States are Canada, Mexico, the European Union, and the Pacific Rim countries (Colander, 2004, p. 415). The numbers from the June rep ort showed that the U.S. trade gap with Mexico reached a new record and is on tract to break last years record numbers. Another country in which the trade gap has widened is China. The exports to China eased while imports climbed to an all-time high. This kindred is much more politically sensitive. In fact, U.S. manufactures and labor groups complain that Beijings policy of holding the value of its currency steady against the dollar has tending(p) it an unfair trade advantage (Reuters, 2004).