Question

Research and analyze the US trade deficit. Answer the following questions.

How large is the US trade deficit (relative to GDP)?

How has the trade deficit changed recently? Why?

Do you expect this trend to continue? 4 Points

Is this trade deficit a bad thing or a good thing, and why?

Describe what would happen if we implemented more trade protection (tariffs, quotas, VERs)

Answer 1

The trade deficit of the USA has increased in 2018 from $552.3 billion in 2017 to $621.0 billion. In terms of GDP, this trade deficit accounts for 3% of total GD in 2018. While in 2019, the U.S. trade deficit was $616.8 billion

In the year 2016, the trade deficit was $500 billion, it became $$552.3 billion in 2017, $621.0 billion in 2018 and it touched the level of $616.8 billion in 2019

Yes as the American population is more attracted to the product manufactured in other countries, the country has to import more items and this will cause the trade deficit to increase in near future, especially with China. But as under Trump administration, there are some trade talks going on with China that is the largest importer in the USA, the trade deficit can be controlled to some extent.

A trade deficit occurs when the imports are more than the export and it results in the outflow of money from the country and it indicates ha country is spending or money than it is earning, So trade deficit is not good

If the trade protection is applied, then the import will become costlier and the citizens will be forced to buy the products made in the USA but this will also hamper the competitiveness of the local industry