Trade Deficit of the Us and the Undervaluation of the Rmb
The causes of the large trade deficit of the US
The undervaluation of the RMB
The causes of the large trade deficit of the US
A trade deficit is when a country imports more than it exports. As a matter of fact, in 2012, the US trade is preoccupied by a deficit reaching 539.514 billion. According to Robert E. Scott, the Director of Trade and Manufacturing Policy Research at the Economic Policy Institute in the US, there are three main factors that explain this phenomenon. He confirms that “China accounted for three-fourths of rise in non-oil goods trade deficit” found in Economic Indicators, category Trade and Globalization.
The three factors, Robert E.Scott is talking about are:
- The increase in net imports of crude oil and refined petroleum products.
- The growth in deficit in non-oil goods, dominated by trade in manufactured products.
- The China’s illegal manipulation of its currency.
Why are the causes quoted in the article relevant?
a. The trade deficit is driven by the petroleum imports:
As a matter of fact, America is dependent on foreign oil, which leads to the trade deficit. In 2010, the imported petroleum-related products, such as crude oil, natural gas, fuel oil, were $252 billion. In spite of high oil prices that constantly increased, this import raised to $313 billion in 2012. This increase is considered responsible for two-thirds of the growth of the trade deficit in goods. As a consequence, the recovery was slowed down while domestic job creation was suppressed. Moreover, the exporters, especially in China, and in oil-exporting nations, took up the domestic demand for goods.
b. Consumer products are large contributors to the trade deficit:
In 2012, the US imported $516 billion of these products, such as clothing, consumer electronics, furniture, household goods, and drugs. At the same time, it only exported $181 billion, which results to $335 billion deficit in consumer products. Furthermore, the US deficit reached $152
The undervaluation of the RMB
The causes of the large trade deficit of the US
A trade deficit is when a country imports more than it exports. As a matter of fact, in 2012, the US trade is preoccupied by a deficit reaching 539.514 billion. According to Robert E. Scott, the Director of Trade and Manufacturing Policy Research at the Economic Policy Institute in the US, there are three main factors that explain this phenomenon. He confirms that “China accounted for three-fourths of rise in non-oil goods trade deficit” found in Economic Indicators, category Trade and Globalization.
The three factors, Robert E.Scott is talking about are:
- The increase in net imports of crude oil and refined petroleum products.
- The growth in deficit in non-oil goods, dominated by trade in manufactured products.
- The China’s illegal manipulation of its currency.
Why are the causes quoted in the article relevant?
a. The trade deficit is driven by the petroleum imports:
As a matter of fact, America is dependent on foreign oil, which leads to the trade deficit. In 2010, the imported petroleum-related products, such as crude oil, natural gas, fuel oil, were $252 billion. In spite of high oil prices that constantly increased, this import raised to $313 billion in 2012. This increase is considered responsible for two-thirds of the growth of the trade deficit in goods. As a consequence, the recovery was slowed down while domestic job creation was suppressed. Moreover, the exporters, especially in China, and in oil-exporting nations, took up the domestic demand for goods.
b. Consumer products are large contributors to the trade deficit:
In 2012, the US imported $516 billion of these products, such as clothing, consumer electronics, furniture, household goods, and drugs. At the same time, it only exported $181 billion, which results to $335 billion deficit in consumer products. Furthermore, the US deficit reached $152