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DO NOT COPY FROM INTERNET PLEASE PLAGIRISM IS PROHIBETED

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The US President Donald Trump and his advisors have repeatedly said that they intended to get rid of the US trade deficit.

Question 01: What are the main industries responsible for this trade deficit? Support your answer with numbers (Words 200)

Question 02: What are the main countries responsible for this trade deficit? Support your answer with numbers (Words 200)

Question 03: As of April 8th 2018, list the goods and the countries for which the US has decided to create new tariffs. For these goods, what are the amounts currently imported by the US? (Words 250)

Question 04: List the US goods for which China has decided to create new tariffs. For these goods, what are the amounts currently imported by China? (Words 200)

Question 05: Assume that the new tariffs will decrease both US exports to China and Chinese exports to the US by 30% (only for the targeted goods). Building on your answer on questions 1 to 4, what would be the impact of the new tariffs on the US-China trade deficit? Support your answer with numbers (Words 200)

Explanation / Answer

1. The main industries which are driving trade deficit in US are consumer products sand Automobile. In the year 2017, United States has imported $602 billion of consumer products like medicines, clothes and other household items and exported only $198 Billion which has contributed a lot to the deficit. It has imported $359 Billion of Automobile whereas exports were only $158 Billion which has widened the deficit by $201 Billion. Most of the imports are dominated by capital goods like computers, automobiles, electronic items.

2. China is mainly responsible for increased trade deficit of America. Chinese consumer products are dumped in American market and American cannot compete with china in terms of so low prices. If America would have protect the economy through some trade protectionist measure then the American consumers will not be able to bear he prices of Make in America products which will disturb them. Chinese largest population with low standard of living and low minimum wages as resulted in larger production base. It has also impacted US jobs where manufacturing is almost ruined by China. Loss of manufacturing jobs is the major concern of America. Even from time to time, America is coming up protectionist measures to settle their manufacturing sector and industries yet the situation is in dark. After China, it comes Mexico. But China only accounts for 66% of total US trade deficit.  

3. US has decide to increase tariff lines mostly for the Chinese products and for every country except Mexico and Canada which is exempted from the increased tariffs. US has imposed 25% tariffs on import of Aluminium and 10% on Imports of Steel. This is being done to save the domestic and indigenous market from external competitive products and to boost the domestic manufacturing sector. US has placed 25% tariff on some 1300 industrial and technology products imported from China. This is estimated as $50 Billion 2018 imports of US from China which is being done to upgrade its manufacturing sector and the same end boosting the trade imbalances.

4. Tariffs by Us has resulted in a cold war between US and China. Beijing has implemented increase in tariff lines like 15% increase on imports of Fruits and Ethanol from US, Pork and Aluminium also subjected to an additional tariff of 25%. In total, China is looking to increase tariffs on 128 kinds and categories of US products. This is the result of tariffs increase by US resident Donald Trump on steel and aluminium imports from China.

5. By all these actions of both the governments, the US Trade deficit will be highly impacted. However, now it will be a serious concern for US as it will result in more and widened Trade Deficit. US cannot suddenly stop importing from China like consumer goods and Pharma products as they are dependent on it and population of US is dependent on it because of competitive prices. Sudden, increment in the prices by China will affect the domestic people of US. China will not get much effected as the basket of imports from US are relatively less whereas US is much dependent on China for inputs.

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