What would happen if there were no trade deficit with the rest of the world.?

Answer 1

'Though widely criticized as an imbalance, the trade deficit and related capital inflow reflect U.S. growth, not weakness -- they link the younger, faster-growing U.S. with aging, slower-growing economies abroad.

The common perception is that Americans drive the trade deficit in an unhealthy way by spending more than we produce. To make up the difference, foreigners ship us things on credit. This sounds bad, but should be evaluated in terms of our demographics, low unemployment rate, attractiveness to foreign investment and rising household savings. The under-60 U.S. population is expected to grow for at least 50 years while the under-60 populations in Japan and Europe are already declining and in China will turn down within a decade. They need bonds while Americans need capital. They want to save more than they invest in their own economies, and are eager to help us invest more heavily (through their purchase of bonds.)

With all the negativism about the U.S. economy, it's easy to forget its attractiveness. Foreigners are as eager to invest in the U.S. as we are to buy goods and services from them -- it's a two-way street. Our 10-year government bonds yield 4.6% per year versus 1.6% in Japan, while our government debt is 38% of GDP versus 86% in Japan. The comparisons with Europe are not as extreme as Japan's, but still heavily favor the U.S.

But the trade deficit, around for hundreds of years of solid American growth, doesn't justify the inflation risk from dollar weakness or the growth risk from protectionism. And the trade deficit probably wouldn't respond to a weaker dollar anyway -- yen strength hasn't dented Japan's trade surplus, and it took a recession to create our last trade surplus in 1990-1991.'

Answer 2

It is the goal of Economists to lessen the trade deficit for a "Soft Landing". This would involve slowly devaluating the dollar. As dollar lessens USA goods will becomre more affordable in other countries & we'll stop buying forien goods.

Prior to WWII the USA's policy was to be self-sufficient. This worked great since the USA has so many resources. We'd probably still be there if the war didn't pull us into it.

Anyways, we're able to afford this trade deficit because other countries (China, Britian, & Saudi) are loaning us money. Once they stop, then the USA will stop this deficit, and the USA will then stop outsourcing so much to countries like India, Phillipeans, and Mexico. I do believe that this will benefit all. These countries have a good foundation, and the means to start their own enterprises, and this correction will allow them to produce on their own, the USA to produce on their own, and growth will continue.

Answer 3

They would probably raise taxes and come up with some bogus reason for it. Then they would spend more money than they had until we were once again in debt to other nations. They don't want to pay the trade deficit off. They barely want to balance the budget.

Answer 4

fake, imposing cost lists creates barriers to commerce and were instrumental in making the excellent melancholy worse. cost lists, or the completed practice of protectionism, has been shown to be a grasping and ill conceived coverage that in trouble-free terms causes lengthy time period monetary harm on the fee of couple of minutes period useful aspects. Even many some distance left economists agree that protectionism isn't a answer and free commerce is the thanks to bypass, regardless of if that is not any longer a mattress of roses the benefits outweigh the detriments.