Introduction
The term macroeconomic is described as a branch of economics, which deals with the relationship among aggregates components of the economy such as the gross domestic product, inflation, and the unemployment level, among others. This paper will inspect the present state of the United States macroeconomics elements and its implication to the international trade. In essence, the speech centers on macroeconomic components and mainly focuses on international trade and foreign exchange rates.
A surplus of imports into the United States has both the positive and negative implications. The group that benefits from such an import surplus is mainly the consumers whereas the local business suffers from the same. The United States should produce and manufacture so as to export the products to other nations. When the United States export trade reduces in size, then the workforce and economy of the U.S. also follows the suit because the country will mainly be dependent on the imports. The United States surplus of imported cars surpassed the exported ones by $ 152 billion in the year 2012 (Morrison, 2011). Additionally, the shelf life of cars in the same year took a whole year. The implication for this is that each end of the year cycle the unsold models are sold off at gigantic discounts to pave the way for the brand new models and thus the consumers will benefit from such discounts.
Concerning the effects of the international trade to the GDP, domestic markets and the university students, the international trade entails exports and imports, whose net outcome impacts the country’s GDP. And because a surplus of imports means that the United States is essentially importing more products than it is exporting, the United States GDP would be affected by the net exports or deficits. The consequential implication of financing deficits involves an upsurge in the rates of interests from the selling of bonds that trims down the level of investments as well as economic growth, which in turn decreases the GDP. In an environment where the imported goods bring in bottle-neck competition to the domestic markets, a struggle occurs in such markets. The demand for local products in the abroad markets will be negatively affected. Thus, the domestic markets will fail to thrive in the overseas markets reducing the jobs suppose to be generated from exportation. Nevertheless, employment can be generated for the advertising, sales and distribution of imported products.
The impacts of international trade on the students at higher learning institutions in the recent past have brought about awareness of a vivacious industry in the education sector. The United States was in a better position to gain a forty-five percent market share out the $35billion global market available for international students. The figures depicted a healthy surplus of $ 12.6 billion in the higher learning sector. The rate at which one currency is transacted for another defines the meaning of foreign exchange. Therefore, the exchange rate is the value of a currency in comparison to that of another country and is mainly determined by two basic forces of economics, that is, demand and supply. In a situation where the supply of a country is in excess to the demand for its currency, the value of the country’s currency plummets. Nonetheless, the value of the currency rises when its supply is below the demand. When the United States dollar appreciates relative to that of another country, her exports to that country will become more expensive. The subsequent effects of the dollar appreciation in the long run is that it may lead to decline in the U.S. volumes of exports and hence loss of jobs by the exporters.
Trade barriers such as quotas and tariffs can impact international trade in the sense that it averts the flow of goods from producers or manufacturers to the consumers. Trade barriers restrict the quantity of goods to be imported into the country by setting a limit that must not be exceeded. Governments’ primary put in place the measure to protect domestic industries from outside competition. When the barriers prevent the flow of goods from one nation to the other, it affects the productivity of the manufacturers and also reduces the consumers’ choice to purchase better quality products as the barrier tames competition. Moreover, the price of imports will heighten, and the domestic producers in the United States would profits although only in the short run.
The restriction of goods from China into the United States may not offer the best solution to the sudden growth of the Chinese goods and massive trade surplus. Imposition of quotas and tariffs to limit the imports from China may seem a simple way to go to curb the menace instigated by the surplus. The restriction may not be helpful because most of the imports from China are tied directly to the U.S. domestic companies as suggested by Woo (2004). For instance, when the tariff of 30 percent is impose to all the imports from China, the prices of products within the local markets will go up by an equal proportion. Therefore, trade restriction against Chinese goods may lead to inflation in the United States due to the high dependency between China and United States.
References
David, H., Dorn, D., & Hanson, G. H. (2012). The China syndrome: Local labor market effects of import competition in the United States (No. w18054). National Bureau of Economic Research.
Morrison, W. M. (2011). “China-US trade issues.”
Woo, W. T. (2004). The economic impact of China’s emergence as a major trading nation. WTO, China and the Asian Economies: Free Trade Areas and New Economic Relations, Beijing, China, 18-19.
