Reason For The United States Imports Economics Essay
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Published: Mon, 5 Dec 2016
In recent years, studies show that the United States imports more than it exports. Imports are any goods or services brought in from one country to another for sale. Exports, refers to the selling of goods and services produced in the home country to others. This means that the United States is buying more than we are selling at this very moment. Companies import goods in order to supply the domestic market at a cheaper price. Companies, also import goods that may not be available in the local market. Exports outweighing imports helps widen the trade deficit. This overall widening of the country’s deficit shoes how difficult it will be to rebalance the global economy so that the United States does not consume more than it produces.
The United States importing more than it exports affects the economy by tipping the balance of trade. The “Balance of trade” also known as “net exports”, is the difference between the monetary value of exports and imports of output in an economy over a certain period. In easier terms it is the correlation between a nation’s imports and exports. The United States importing more than it exports places the United States in what is known as a trade deficit, or trade gap. According to the United States Census Bureau, in 2011, the United States trade deficit was $559.956 billion. This was due to the United States having $2.1 trillion in exports minus the $2.67 trillion the United States had in imports. This is an example of how the United States Economy is becoming stronger, considering the fact that this is way better than the outlandish $753 billion dollar trade deficit that happened only four years prior.
The reason for the United States imports is because its imports in oil, consumer goods and automotive products outweigh exports in many of the same groups. Being that the United States is the third largest exporter in the world; the economy still manages to export a large amount of goods. The United States is only behind China and the European Union. It is a known fact that two-thirds of the United States exports are material goods. The most imperative export for the United States is services, which is the remaining third of the economies exports. As the biggest service exporter in the world the United States manages to stay atop the three largest exports categories in service which are royalties and license fees, travel services and financial services. On the contrary the United States is the world’s largest importer; more than 80% of the United States imports are goods (BEA). The largest category is industrial machinery and equipment, within this the largest group is oil and related petroleum products. In order to get out of the recession the United States needs to figure out how to try and balance out the trade deficit.
As a result of production levels dropping and the continuing of selling off our large companies to foreign interests, tax revenue has receded and we have fewer American owned companies remaining to produce wealth and generate taxes. American owned companies are what we need to build the economy. The persistent importing of goods from other countries will hurt our economy even more. Small businesses help drive the American economy. Small businesses also provide jobs for over half the nation’s private workforce.
The debt enlargement has impacted every level of our economy. This ongoing trade deficit is detrimental to the nation’s economy over the long term because it is financed with debt. The trade deficit also helps the United States lose its competitiveness. This means one day we won’t be able to compete with other countries. When purchasing goods overseas for a long period of time, the United States companies lose their expertise and even factories to make certain products. The government will have to continue to borrow money and import more goods in order to operate.
One of the biggest issues existing today with imports and exports, are the rising and falling of gas prices. In the past year, the United States exports of oil rose above its imports of oil. Being that in the past year, gas prices have reached an all-time high, this shows that exporting more than importing is not always a positive thing. In fact, The Energy Department reported, “For the first time since 1949, the United States exported more gasoline, heating oil, and diesel fuel last year than it imported” (Winter). This change is significant because for years, the United States economy has depended heavily on other countries for imports of fuel to meet demand. In the past year, the capacity of fuel exports has been rising because many citizens are using less fuel, and in return buying more resourceful cars. This case allows U.S. refiners to export more fuel to rising economies such as South American countries. For example, “In 2011, U.S. refiners exported 117 million gallons per day of gasoline, diesel, jet fuel and other petroleum products, up from 40 million gallons per day a decade earlier” (USATODAY). The more fuel the U.S. economy exports the higher the prices of gas will be. This statement is true because the more fuel and oil that is sent to other countries, the less of a supply pillow the United States will have. These facts and statements show while the United States exported more oil than imported, the downside is that gas prices were higher than they ever were.
When President Obama took office, he prompted that he planned to change the economy in a substantial way. According to CNN, his initiative to enhance the economy was to increase the amount of exports over the next five years, while in return creating 2 million plus jobs. As said earlier in the analysis, the balance of trade needs to be rebalanced as the economy recovers. Obama and his teams support of increasing exports has not only created a surplus of jobs, but also will shift the economy towards exterior trade.
In conclusion, it is clear to see that the United States has put the economy into quite a predicament. Because of the negligence of the future, America has continued to create a massive amount of debt. With all of the problems being faced, let’s look at a possible solution to this problem. There are many resources that the United States must import. However one of the biggest issues is oil and can be something that can definitely be manipulated for the future. The United States possesses its own oil supply that it has yet to dig into for various political reasons. If this oil is found and used then not only will we not have to import oil, but gas prices can go down tremendously in America.
In the midst of everything that is currently occurring, there is good news as of late. According to the New York Times, exports last month have increased by 3.1 percent and a 1.5 percent increase in imports. This is good news and a slight sign of improvement. Further, President Obama’s plans to enhance the economy will help our future. If the United States can continue to keep this progress, then maybe the economy can decrease the trade deficit more every year until we can maintain some type of balance.
When it comes to the future state of the United States economy we can only be optimistic in the nation and hope for a better tomorrow. If bad decision making continues as far as our country and our money, we are making it harder for the future leaders of this country. That is simply making disarrays for someone else to clean which is not the type of behavior this country needs to continue to exuberate. The choices we make today effect our tomorrow and if we plan on staying strong as a nation, the way we handle our finances must be improved and be more strategic. If not our future will be unclear, and our great country will go into an uncontrollable downward spiral.
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