Trade Deficit

In 2015 the U.S. trade deficit with China was 367 billion dollars. This is then new record, which is up a little from last year’s record of 343 billion dollars. The U.S. trade deficit is the amount by which the cost of a country's imports exceeds the value of its exports. U.S. exports to China was only 116.2 billion dollars. While the imports from China had created a new record of 483.9 billion dollars. And the trade deficit keeps growing because the imports are rising much faster than the exports. The United States imports electronics, clothing, and machinery from China. China can produce goods that Americans want at the lowest cost. Most economists have agreed that China's competitive pricing is the result of two major factors. A lower standard of living, which allows companies in China to pay lower wages to workers. And an exchange rate that is partially fixed to the dollar. This is saying that man American companies can’t compete with China’s low costs. And the result of this is that more and more U.S. jobs are lost. If this were to happen, U.S. consumers would have to pay higher prices for their "Made in America" goods. Most people would rather pay as little as possible for computers, electronics, and clothing. For many, that's true even if it means other Americans lose their jobs. China must buy so many U.S. Treasury notes. That it is how China is the second largest lender to the U.S. government. Japan is the first largest lender to the U.S. government. As of October 2016, the U.S. has a debt to China of 1.115 trillion dollars. That's 29 percent of the total public debt owned by foreign countries. By buying Treasuries, China helped keep U.S. interest rates low. If China were to stop buying Treasuries, all the interest rates would rise, and that could throw the United States and the whole world back into the recession. It isn't in China's best interests. As it is that U.S. shoppers would buy fewer Chinese exports. In fact, China is buying almost as many Treasuries as ever. The U.S. trade deficit with China means that U.S. companies that can't compete with cheap Chinese goods must either lower their costs or go out of business. Many businesses reduced their costs by reaching out and giving jobs to India and China. Which in turn is adding to the U.S. unemployment. But other industries have just fried up and gone. U.S. manufacturing, which is measured by the number of jobs, has declined 34 percent between 1998 and 2010. As these industries declined, so has the U.S. affordability in the global marketplace. In 2016, U.S. Treasury Secretary Jack Lew continued the U.S.-China Strategic Economic Dialogue. Which discusses with China the U.S. desire to loosen its hook against the dollar. That would raise the price of all the Chinese exports. It also seeks to open up U.S. companies to the China's domestic market. Both of these actions would lower the trade deficit.