New World, New Policy: A Review of the Trade Deficit

President Trump announced a new executive order aimed at pushing forward his trade agenda. Targeting the US trade deficit, the order directs the Commerce Department and the US Trade Representative to lead an interagency investigation and produce a “comprehensive report” on the causes of the US trade deficit. They are to do so by looking at specific industries and trade policies by foreign countries that contribute to the continuing gap between US exports and imports.

According to the US Census data on trade, the US ran about a $500 billion net trade deficit in Goods and Services with the rest of the world in 2016. The US runs a larger deficit when looking only at Goods (such as manufactures, agriculture, etc.), at $750 billion, while the county runs a surplus of about $250 billion in Services (such as business services, finance, information technology, etc.). Broken down by country, the largest Goods deficits are with China (over $54 billion in the first two months of 2017) and Mexico, as well as Saudi Arabia (petroleum imports) and the European Union. In Services, it is noteworthy that the US runs sizable surpluses with all of these same countries. (Data from US Census) Continue reading

Consequences of the Euro-Zone’s Declining Economy

As unemployment rises, another quarter of recession looms for the European economy. On Friday, February 21 some nations reported missing their government deficit targets despite many rounds of spending cuts. The region’s economy is expected to grow later this year, but during the last three years the 17 country union has been the slumps. The Obama administration is concerned about the effect of  the European Union’s declining economy on the United States. In his State of the Union Address at the beginning of February 2013, President Obama mentioned  free-trade talks with the European Union in an effort to promote American and European trade. The key question is whether such an arrangement will be primarily pursued to address trade issues or whether its main purpose is the foundation of a political counterbalance to China.

Danger of the Euro-Zone’s Declining Economy

As unemployment rises, another quarter of recession may occur in the European economy. On Friday, February 21 some European nations forecasted missing their government deficit targets despite many rounds of spending cuts. The region’s economy is expected to grow later this year, but the 17 country union has spent the last three years in the slumps.

 

The Obama administration worries how the European Union’s declining economy will affect the United States.  President Obama hopes that talks of free-trade with the European Union will promote American and European trade. A key question is whether such an agreement is mainly focused on trade or on developing a political counterbalance to China.