Question

what effect does current economic conditions have on the growth of U.S imports?

Answer 1

Imports and exports seem the terms that have little bearing on everyday life, in fact, exert profound influence on both the consumer and the economy. In today’s interlinked global economy, consumers are used to seeing products and produce it from every corner of the world . These overseas products or import provide more choices to consumers and help them manage strained household budgets. But too many imports coming into a country in relation to exports i.e. which are products shipped from the country to foreign destination can distort a nation’s balance of trade and devalue its currency. The value of a currency in turn is one of the biggest determinants of a nations economic performance.

In other words because the gap between imports and exports has been reducing or shrinking, it has a much smaller negative effect on GDP thereby allowing the economy to grow. If a country imports more than it exports it leads to trade deficit. If it imports less than it exports, that it leads to trade surplus. When a country has its trade deficit, it must borrow from other countries to pay for the extra imports. It's seemes like a household that's just starting out.

Why has the trade deficit been shrinking? Because changes in the value of dollar relative to the other currencies have made our products look relatively cheap.

American exports respond positively to higher foreign demand and cheaper dollar. Our imports grow with higher domestic demand and have more expensive dollar. The decline in our trade deficit in recent years resulted primarily from depreciation of dollar, since most countries were growing simultaneously with United States and thus partially neutralized the influence of differential growth rates. Dollar depreciation made our exports cheaper to foreigners and our imports more expensive to us.

One of the most valuable contributions is to quantify the effect of U.S. protectionism not only on net national welfare but also on redistribution of income within the US. The net welfare impact of trade barrier is an important thing to measure but it understates the true impact of protection. The deadweight loss of lower consumption and higher-cost production can be a much greater transfer of income within society from consumer to producers. Americans should know who loses and who gains and by how much frrom existing trade barriers.

The commission’s analysis should attempt to measure the impact of barriers on specific industries and income group. It is a fact that U.S. trade policy have some of the government’s highest barriers are aimed at products that are consumed disproportionately by low-income household. Those necessities include clothing, textiles, footwear and also some food items. The impact of barriers on the household budgets of a cross-section of American families. One method would be to measure the impact of price changes on household welfare relative to household income.

In the debate over U.S. trade policy the interests of those who pay the cost on protectionism are systematically ignored. Industries and interests that benefit from protection are usually concentrated and politically connected. The integrated steel industry, sugar producers, and textile manufacturers are the examples. Those who pay the price for protection mainly consumers but also import-using producers are typically more dispersed and politically unorganized. As a result their interests are discounted in the national debate over trade.

Another important contribution of a third update would to shine the light of economic analysis on the mistaken notion that trade barriers “save jobs”. Import barriers may save some jobs in certain protected industries but at the cost of destroying job in other, more globally industries. Trade liberalization does not cause a net loss of jobs but a better, more productive mix of jobs in the economy. Like advances in technology trade liberalization raises overall productivity allowing Americans to specialize in producing goods and services in which they enjoy the greatest productivity advantage. The result is greater labor productivity and higher real incomes for American families.