National Problem: Trade Deficit

One of America’s most common economic problems is trade deficit. Trade deficit is the problem in which a country’s imports are more than exports. It is an important and significant problem to address because it has a great impact on the national economic growth and welfare. Due to more imports than exports, America depends more on imports than exports. This over dependency on imported goods is likely to ruin local US companies, business organizations and producers (Heffner 2012). As a result, the economy of the US and the welfare of its citizens will be affected negatively by the influx of foreign products into the country.

Due to overdependence on imported products, the US economy is no longer able to produce what is enough to sustain the citizens of the country. Trade deficit also makes US to sell off its assets and obtain large debts so as to sustain the living standards of its citizens. It is therefore important to address this problem so as to increase the productivity of the country and raise the export value of the country. This will improve the economy and welfare of US citizens.

The main cause of the US trade deficit is the trade policies and regulations of the country which allows for trade with other countries which have comparative advantage over the US in such things as innovation, machinery, raw materials, technology and light industrial materials (Griswold 2000). Since the US is perceived to be a developed country with a lot of wealth, its trade policies leads to a strong economic engine that can be used to gain additional wealth through sources like imports. Availability of wealth provides a developed nation like US with more ready cash that can be used to purchase imports than the cash that they earn through exports.

The US may be considered as super power but its wealth is mainly used as a means of purchasing imports at the expense of sustaining the living standards of the citizens of the country. This leads to reduced economic growth and lowers the living standards and the welfare of US citizens. US policies on trade should be amended in an attempt to reduce the impact of trade deficit in the US so that the country may not over-depend on imports and to reverse the effects of the problem.

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