While the U.S. has made strides in increased oil and gas production and higher efficiency standards, we still import much of the oil we use every year, which adds to our massive trade deficit. For every $1 billion in trade deficit we have, we lose 9,000 jobs. We must do a better job of protecting our economy by making sure we are competitive with the rest of the world.
Tag Archives: Trade Deficit
Every year, hundreds of billions of dollars leave the rapidly depleting coffers of the United States and go to China. This huge transfer of wealth has resulted in dramatic effects for both countries. For China, it has brought about an economic boom; for the United States, an economic decline. Chinese loans to the U.S. government, to the tune of over $1 trillion, have made a large contribution to this result. Effectively, this has silently granted the Chinese government an alarming amount of leverage over our economy.
A fair trade relationship between countries is something to be desired. Each country can take advantage of its relative strengths and both countries grow economically. An unfair trade relationship, however, can be as destructive as the fair one is healthy, and can lead to the decline of a civilization. This latter case is precisely the malaise afflicting America. Just look at our relationship with China as an illustration.
One of the main reasons our Free Trade Agreements (FTAs) do not work is due to the fact that other countries immediately implement a value-added tax system after joining the World Trade Organization (WTO), while the U.S. still has not implemented a VAT. Free Trade Agreements either eliminate all or most of the tariffs between two countries. Once a country joins the World Trade Organization (WTO) that country then almost immediately implements a VAT system or raises their VAT to replace their tariffs. The VAT acts just like a tariff but is entirely in line with WTO standards. The result of this system is that American exports are essentially economically blocked by other nations.
There are two great debts the American people have, yet there is only one the nation talks about. These twin debts are the national debt—money borrowed from the nation against itself compiled with money borrowed from other nations—and the trade deficit: money given to other nations for imported products and services that will, at some point, come back to buy out the United States.