International Trade Summary

Promoting international trade is not a zero-sum game. It is a win-win proposition; both parties gain from trade.

Consider the following:

Tariffs are paid by the citizens of the country imposing tariffs, not by the citizens of the country producing the products upon which the tariffs are levied.

The term “trade deficits” is a misnomer. Every country’s trade is always in balance.

Trade deficits do not mean the US no longer produces anything to export. The US is the world’s second largest manufacturer and the world’s second largest exporter of manufactured goods.

Trade deficits reflect a strong economy. Trade deficits rise during economic expansions and fall during economic contractions. Unemployment falls as trade deficits rise and rises as trade deficits fall.

Imports and exports are complements, not competitors. Both are necessary and both contribute to economic growth.

Roughly one-third of all US imports and exports is trade between US multinational companies and their overseas subsidiaries.

Foreign-owned companies operating in the US number in the thousands and provide directly or indirectly jobs for more than 13 million US workers (roughly, 10% of the US workforce).

US trade deficit in goods in 2018 (as a % of GDP) was the same as it was 5, 10 and 15 years earlier.

The rise in US goods trade deficit with China has not increased the US total goods trade deficit. It has been offset by reduced goods imports from other trading partners.

There is a strong correlation between the rise in world trade and:

The rise in world GDP

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The dramatic fall in the world’s extreme poverty rate

The rise in world life expectancy

For every US manufacturing job lost to trade between 2000 and 2010, seven US jobs were lost to domestic productivity improvements. Those seven jobs cannot be brought back from overseas because they never left the US.

Write a 700- to 1,050-word evaluation of credible economists’ unbiased opinions on the benefits, costs, and results of current US trade and tariff policies. Complete the following in your evaluation:

Evaluate how US trade policy changes in the last 2 years affect global trade activities by multinational corporations.

Discuss credible economists’ opinions on the long-term effects of trade and tariff policies changes in the last 2 years.

Explain the effect of recent changes to trade and tariff policies have had on your employer, you, or someone you know.

Cite at least 2 academically credible sources.

International Trade Summary

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International Trade Summary

Agreeably, every man lives by exchanging. Besides allowing countries to export and import goods, international trade culminates to the expansion of markets for participating countries. Subsequently, this type of trade provides access to more goods and services unavailable domestically. However, much attention should be directed to trade agreements, namely, trade tariffs and policies, which have a significant impact in promoting international trade. Consequently, markets and pricing of goods becomes more competitive, and a win-win proposition for all parties involved is attained. This paper seeks to deliberate credible economists’ unbiased opinions on the impact of current US trade and tariff policies by responding to discussion questions.

Effect of US Trade Policy Change on Global Trade

Trade policy changes have the potential to affect trade, and the global economy both positively and negatively. Although policy makers intend to formulate mutual trade agreements for the benefit of all, Caldara et al. (2020) believes that barriers such as unfavorable tariffs could raise the prices of products, alongside reducing the availability of goods and services. One observable effect of US trade policy changes include foreign investments turning into international trade. According to Nicita (2016), economists have termed this shift as reglobalisation. As international trade restrictions reduce significantly, setting up businesses in countries with a large customer base enhances market competitiveness. Successively, these policy changes have resulted in raising wages for workers and lowering the cost for companies and consumers. For instance, not only in the United States but also throughout the global economy, additional jobs have been acquired in line with both the construction and the entertainment industry, among others. Not to mention, the impact of US trade policy changes has led to large-scale acquisition by Chinese enterprises, alongside turning public debt into private equity.

Long-term Effects of Trade and Tariff Policy Change

Long-term effects of trade and tariff policy change are amenably inevitable. Based on arguments by Irwin (2017), trade and tariff policy changes affect countries like America and the global market by raising the prices and reducing the availability of goods and services for businesses and consumers drastically. Ultimately, this has resulted in lower income, decreased employments rates, and a histrionic reduction in the overall economic input. More significantly, these changes have affected the relationship between the U.S and China as the major economic players in global trade. After President Trump announced intentions to levy 10% tariffs on a $300 billion import package, the Chinese government responded by allowing their currency (Yuan) to weaken against the dollar (Caldara et al. 2020). Notably, the invoked trade war between the US and China forced its citizen to buy the country’s debt; consequently driving the country’s economy to a pit hole. Companies in the US and China also face the risk of an eroded global competitiveness.

Impact of Recent Changes to Trade and Tariff Policies on Individuals (90)

The recent changes implored as measures to raise tariffs and trade policies have heightened the global war on trade, resulting in unrecoverable consequences in the overall economic growth and employment. In the quest to respond to changes in trade and tariff policies, most employers are forced to adjust wages for their workers (Irwin, 2017). The increase in pricing of goods has led to unavailability of certain products, which in the end corresponds to decreased wages and the localization and limitation of certain sectors and occupation. Additionally, Nicita (2016) argues that since the world has become a typical village, the effect of these changes have extended to the households of citizens of most countries. In terms of raised taxes to meet the national debts, governments are on the verge of subsidizing loses and uncompetitive global competitiveness.
Conclusion

In essence, credible and unbiased economists’ opinions have been conferred throughout this paper in response to discussion questions regarding the benefit, costs, and results of the US trade and tariff changes. In light of the above, the effect of US trade policy changes on global trade by multinational corporations, benefits in terms of pricing and availing of domestically unavailable goods and services. With the right trade agreement policies, long-term effects that could potentially promote or reduce international trade are depicted to extend to typical citizens of a country. In that case, keen considerations are necessary to promote global competitiveness, and hence reduce trade wars significantly.


References

Caldara, D., Iacoviello, M., Molligo, P., Prestipino, A., & Raffo, A. (2020). The economic effects of trade policy uncertainty. Journal of Monetary Economics109, 38-59.

Irwin, D. A. (2017). Clashing over commerce: A history of US trade policy. University of Chicago Press.

Nicita, A. (2016). Exchange rates, international trade and trade policies. International Economics135, 47-61.