Free Essay Example - Foreign Trade

Foreign trade is the exchanging of capital, goods, or services within the international territories. The majority of nations take foreign trade as a substantial share of the gross domestic product (GDP). In the U.S., import and export data in the context of international trade is collected by the Census Bureau, which is an agency working closely with the Treasury Department. The main tasks of Census Bureau after collecting the foreign data is analyzing it. After the analysis, it delivers comprehensive statistics of goods and estimations of services that were shipped from the U.S. to foreign nations. This paper will provide a summary of exports and imports in the U.S., trading with China, and also elucidate how Trump's trade protectionism has impacted businesses in China and other countries.

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U.S. Exports and Imports

Export amounts and statistics offered by the Census Bureau reflect shipments that occurred within months, quarters, or years. Total exports are analyzed in terms of full goods and services. The last quarter was on 2nd April 2020 and provided data for January and February (Census Bureau, p1). The total exports in February was $207.5 Billion, while exports in January were up to $208.3 billion (Census Bureau, p1). The total amount of exports for the last quarter was thus $ 415.8 billion. In the same period, the total imports in February was $247.5 Billion, while in January, it was $253.8 billion (Census Bureau, p1). The total import amounts for the last quarter was hence $501.3 billion.

Balance of Trade

The balance of trade refers to the difference got from the total amount of imports and exports of a country within a specified period. It is the main component of a nation's balance of payments. It can thus be calculated by subtracting the total imports from the total exports because both variables consider net income got on international assets. The total balance of trade for the U.S. in the last quarter is as follows:

$ 415.8 billion (total exports) - $501.3 billion (total imports) = - $85 billion (balance of trade)

The balance of trade is - $85 billion which depict a trade deficit since the exports are less than the imports. Currently, the trade deficit in the U.S. is necessary as it curbs the challenge of inflation. The ongoing pandemic has, however, augmented the value of the trade deficit.

How Imports and Exports Affect the U.S. Economy

As depicted from the analysis of imports and exports in the last quarter and other past years, the U.S. has been experiencing a trade deficit. However, exports enhance the economic output of the country. It does so by bringing money to the nation, which increases the exporting of the country's GDP (Bown et al., p.7). When money is brought to the economy through exports, more jobs can be created as well as higher wages. Importing goods and services makes the U.S. be dependent on a foreign country's economic power. It can thus bring about a negative impact on the economy like recession, which occurred when OPEC banned its oil exports. Higher importation can also affect domestic currency and inflation since the country will have to increase its foreign currency reserves to pay for the imports.

U.S. Imports and Exports with China

China has been a close foreign trade partner with the U.S. for quite a long time. In the last quarter, reported 2nd April 2020, the total exports to China was $14,030.3 million (Trade in Goods with China, p1). On the same period, the total imports from China amounts to $56,093.6 million. As the figures indicate, the U.S. has a trade deficit with China that amounts to $42063.3 million (Trade in Goods with China, p1). The figure is even more than the total exported goods and services. The facts may not be good news to the U.S. because the worst scenarios may arise like the possible recession in case, for example, China decides to cut back its Treasury purchases.

How Trump's Trade Protectionism Impacted Businesses in China

Protectionism is the situation when restrictions like tariffs with the aim of boosting the nation's industry, together in shielding it from foreign competitions. It is what pushed Trump's administration to put tariffs on some items, especially metal amounting to 25% of tariffs on all steel imports and a 10% tariff on aluminum (Bown et al., p.7). The theory is that taxing foreign imports will make people buy local goods, thus negatively impact businesses in China since they cannot accommodate the high tariffs on their imports. For example, the tariffs had an impact of $34 billion of Chinese imports (Bown et al., p.8). Also, China had to cancel or contracts importing soybeans. Tariffs on imported solar panels, as well as washing machines, depressed the stock market in Chinese businesses.

How Trump's Trade Protectionism Impacted Other Countries

Since the issue of protectionism is a trade war between, mostly, the largest world economies, it has effects globally. For example, high tariffs imposed on Chinese goods made China on its part to tax more on U.S. tech firms like Apple. As a result, the companies increased the costs of products in all other countries. Association of Southeast Asian Nations (ASEAN) recorded disintegrated supply chains. The unemployment rate also increased in Mexico.

Conclusion

Total exports are analyzed in terms of total goods and services. Total imports for the U.S. was more than the total exports in the last quarter. The balance of trade refers to the difference got from the total amount of imports and exports of a country within a specified period. For the U.S., it was negative hence depicted trade deficit. Exports bring more money to the economy while imports make the U.S. be dependent on a foreign country's economic power. U.S. imports from China are more than their exports, thus has a trade deficit. Protectionism negatively affects Chinese businesses due to lack of market, which is equally the same as the effects in other countries as it increased the unemployment rate.

References

Bown, Chad P, Eujin Jung and Zhiyao Lu (2018, 20th September) "Trump and China Formalize Tariffs on $260 Billion of Imports and Look Ahead to Next Phase", PIIE Trade and Investment Policy Watch. Retrieved from https://www.piie.com/blogs/trade-investment-policy-watch/trump-and-china-formalize-tariffs-260-billion-imports-and-look

Census Bureau. (2020, April 2020). Monthly U.S. trade in goods and services. Retrieved from https://www.census.gov/foreign-trade/Press-Release/current_press_release/ft900.pdf

Census Bureau. (2020, April 2020). Trade in goods with China. Retrieved from https://www.census.gov/foreign-trade/balance/c5700.html