Why is America’s trade deficit with China so high?

Why are all American jobs going to China? We find out the real reason?

 

The trade deficit with China and the US was around $347 billion dollars.

 

What does the United States imports to CHINA?

 

The United States imports consumer electronics,clothing and also machinery to China.After they are shipped back to the States,they are considered as imports.

 

What are the causes of the trade deficit?

 

China wants to produce many consumer goods which have much lower costs than other countries as compared to the other countries.

And Americans wants these goods at a lower price than possible.China’s compitative pricing is the result of all these factors.

 

China has a lower standard of living.It allows the companies in China to pay lower wages to the workers.

An exchange rate which is fixed to the dollar.

 

American companies most of the times cannot compete with China’s costs.So the US manufacturing jobs are lost.

Many of the times legislators have tried to impose tarries most of the times.There are other forms which China can use.

 

If the States implements protectionism the US consumers will have to pay a higher price.

 

How is China’s standard of living measured?

China is the word’s largest economy and it also the highest population in the world.A very common way to measure the standard of living of China is to measure the Gross Domestic Product.The leaders of China are trying to out the Chinese economy back on track.They are trying to be proactive and getting the  economy and that they would not accept a lower standard of living.

 

How does China manage the currency problem?

 

China sets its currencies equal to the basket of the currencies,which also includes the dollar.China pegs its currency at a unified market rate and a modified fixed exchange rate.So China’s influence on the dollar remains substantial.

 

The US companies which cannot compete with the cheap Chinese goods must sometimes lower their costs or their goods.

 

What is now being done?

 

Donald Trump has decided to lower the costs and has also asked China to raise more due to the currency.He has also threatened to impose duties on the Chinese imports.

The trade deficit was large ley from the fact that the strength of the US economy which has in turn helped the US consumers afford more imported electronics items and also buy cheap clothes.

 

 

 

 

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