A country’s macroeconomic status is a very critical issue. This is because it determines the economic state of a country as a whole. United States is one of the top three importers and exporters’ globally.It is one of the most stable countries in the trade industry and its currency is amazingly strong surpassing the rest. That is one thing we can boast about as a country.
Trade in the US is regulated by the United States Congress and it is constitutionally acceptable. The country is known to be one of the greatest and most significant trade policy-makers globally. This came to be, right after the great depression. It has developed partnerships with several international trade agreements one of them being the International Trade Organizations.(Holtham, Hopper & Symansky, 1988)
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The US dollar has gained a lot of popularity and strength globally due to its stability. It is basically used as a benchmark in most Forex markets. Most countries in the world accept the dollar as a mode of payment despite the fact that it may not be the country’s official currency.
In 2013, the United States recorded a high trading rate with foreign countries totaling up to $5.02 trillion. This rated the US as the second largest importer and third largest exporter globally.The US largest exports include; commercial crafts, industrial machines, telecommunications, electric apparatus, medical supplies, chemicals, petroleum products, fuel oil, non-monetary gold, plastics and many others. (Muller, Dacorogna, Oslen, Pictet, Schwarz & Morgenegg, 1990)
The US largest imports include; computers and computer accessories, cells phones and pharmaceuticals, automotive vehicles and parts, food and beverages among others.
A question asked by most people is how China still continues to be one of the major importers of goods and services in the US even with the economic stability that the US is facing. It would be simple to just develop and implement quotas and tariffs that will block its importation. At least most people perceive it as being that easy. It is however not as simple as that. When we examine the issue closely, we come to realize that most of our domestic industries are tied to the Chinese imports. Getting rid of China from the US market will thus mean that most of the goods in the market will have to escalate in their prizes. Most of the electronic goods will be forced to escalate in prizes and most dollar stores will be pulled out of business if they risk keeping the price low (Muller et al, 1990)
It is thus evident that China and the US are in some sort of symbiotic relationship where they both are dependent on each other specifically for economic growth and prosperity. The US can also not minimize the amount of imports coming from other countries this is because some foreign countries have competitive advantage over the US in that they produce more goods that the domestic suppliers in the US produce. A good example is crude. Most of the oil wells in the US have dried up. This forces the country to import oil from other countries which obviously come at a much higher cost.
Trade surplus also has a great impact to the US economy. Trade surplus can be said to occur when a country is seen to export much more than they import. In this case, the country seems to depend so much on the money they get from the exports so that they can cater for some of their needs as a country. This would mean that if the goods exported happen to lack market or the market demand goes down, the public finances may face great difficulties and in some cases political risk can be experienced. (Landau & Garber, 2004)
International trade has some great impact on the Gross Domestic Product (GDP) of US economy too. This is basically a way in which all goods and services produced by a country all through the year are measured. This does not account for any goods and services that were imported thus all these are subtracted from the total GDP of the country. Our country imports a lot of products and services therefore leading to a great deficit experienced every year. This is an issue of concern as it would mean that an increase in the foreign imports will reduce the number of jobs and production industries in the country. This therefore means that most university graduates are less likely to get jobs. (Kwan, 2002).
Despite international trade having a negative effect on the GDP, domestic markets and consumers, it is also very important. It is seen as a driver of growth. Strong international trader partnerships leads to prosperity of a country. Our country has created a good trading environment with so many wonderful countries leading to an immense diversity of goods and services offered. This has continuously made us successful in controlling the world’s economy for quit a long time. (Landau & Garber, 2004)
A country has to limit or control the amount of goods getting into through the borders. This is mostly done through the implementation of tariffs. It is mostly taken as tax placed for all the goods and services that are imported. This would happen in the cases where a government may be concerned about the endangered species of some animals or plant species or even when it wishes to reduce the number of certain products being imported in the country. This would at once increase the price of the good and thus reduce its demand in the market. This leads to the reduction of the supply of the goods from the foreign nation. Our State has been on the forefront in ensuring goods imported to our country are regulated bearing in mind the environmental state of the places that these goods are extracted. (Cushman, 1983)
To sum it up, it is very evident that our government has done a lot to improve the economy of this nation. Our country’s economy has grown year by year and despite there being a deficit in the GDP, this hasn’t hindered the tremendous steps our country has made. This country has a trade policy that maximizes the freedom of all the Americans to trade freely in all the global markets by not increasing its exports at the expense of imports. This fairness in trade has contributed greatly to the current state of the US macro economy (Dayal, Power & Chiu, 1983).