International Trade Essay

536 words - 3 pages

Assignment 1: LASA 2 International Trade
ECO201 Macroeconomics
Instructor: George Williams
Completed by: Carleen Wardlow student at Argosy University
July 20, 2013

The table below represent U.S. trade balance with China over years (2007-2011):
...view middle of the document...

This means that United States is exporting more jobs than it is importing from China.
These data shows to what extent U.S. economy is dependent on Chinese economy. United States is heavily dependent on Chinese economy for many of its important requirements, and as a result, Chinese are holding huge amount of dollars as reserves. This is likely to put upward pressure on the value of Chinese currency and therefore Chinese currency would appreciate. The appreciation of Chinese currency might result in China losing its competitive advantage on global stage and therefore can negatively affect Chinese trade balance with other countries. The huge and continuous trade deficit which the U.S. is having with China would cause the dollar to depreciate further against Yuan. The depreciation of dollar might increase the competitiveness of U.S. goods and services (because depreciation of dollar means fall in the price of U.S. goods and services in terms of foreign currency) and therefore can have positive effect on the U.S. trade balance...

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