Recently the U.S. trade deficit has
fallen 7.4% to a five month low in July. The trade deficit represents the
difference between exports and imports. This fall was caused by a 0.4% rise
in exports and 1.1% decline in imports. In total, the decline brought the
deficit down to $41.9bn from $45.2bn in June. It is encouraging to see that our
exports are increasing, but is concerning to see how much our imports fell. As
a major consumer of Chinese goods, I would expect U.S. imports to rise since
they recently devalued their currency. Also, the dollar is strong right now so
I would expect increased imports. Could this be a sign of economic slowdown on
our part?
Complementary to the previous
comment about our lack of imports from China is the fact that the U.S.’s
deficit with China has grown 8.5% since 2014. This bolsters the fact that we
have been gradually increasing our exports, but are consuming less. The U.S.
trade deficit also increased with the EU and is now at a new record high. Clearly
the U.S. is doing well in terms of exports, which is good for our economy. Although,
U.S. economic growth is expected to be 0.1% lower this year than last.
Source: www.bbc.co.uk/news/business-34139983
4 comments:
I agree with John. With such a strong dollar right now, we would expect a trade deficit which is actually occurring. However, there has to be something else going on (like an economic slowdown) that would explain why our trade ratio is improving and the amount of imports is falling.
I believe China is the key to the economic slowdown. Corruption within the Chinese government is causing a slowdown in nationwide production, a decline in reliability of government investment, and thus an economic slowdown that resulted in the downfall of the Chinese stock exchange. China is one of the most advanced economies in the world, maybe too advanced. Essentially I believe corruption and uncertainty of Chinese politicians is causing the world economy to slowdown.
I think in this case, corruption within the government may not be the key reason. As China devalued the Chinese Yuan to increase exports, it automatically lowered the US trade deficit.
Definitely one of the reasons the trade deficit has fallen is because of the Chinese devaluation of the yuan. Because chine wanted to increase their exports, they devalued their currency. I think this is the main reason for the trade deficit, and not so much corruption in the government.
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