In December, the U.S. trade gap widened to a 3-month high. A large portion of imports is attributed to the rising oil prices while the largest export was seen in weapons. One of the more encouraging signs was the fact that exports grew at a faster rate than imports. The article makes note of president Obama's goal to double exports by the year 2015, which at the moment seems to be a reach for the U.S. This appears to be a reach primarily due to the undervalued yuan. Obama's goal would be a lot more realistic if the Chinese allowed their currency to appreciate, which would decrease their exports/trade surplus. This might not tremendously increase the demand for U.S. exports but this action would definitely create a more level playing field.
4 comments:
There is a large gap, but I don't think this should be the main concern for the United States. The U.S. economy has evolved from one centered on manufacturing, to a service-oriented economy. As Obama said during his State of the Union speech, it's time to move forward in this new environment. Yes, it's important not to have such a gigantic trade deficit, but this should not be the main objective.
This reminds me of the movie, "Lord of the War" featured by Nicholas Cage. Most of the weapons sold in the world came from the United States.
Anyway, it's not surprising that the trading deficit increased particularly due to the rise of oil prices since it has a huge part in the transportation for trading overseas. I would think that the United States would need to invest more in producing oil on its soil in an effort to reduce the trading deficit.
Obama's goal is to double the U.S. exports but I don't see any effort reducing the imports, does this mean that we would be still in trade deficit, despite if we doubled our exports overseas. There has to be something done about the imports.
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