South-Westerns' Economic News Summaries
Trade Deficit Threatens Growth
Topic International Trade
Key Words Trade Deficit

Full Article If you have an InfoTrac or BCRC access code, click on the appropriate source to login and view the full text article.
Reference ID: A139773001
News Story

If the U.S. trade deficit stays on its current track, it is forecast to surpass last year’s record high deficit o $618 billion. Most analysts expect it to go over the $700 billion mark. Imports have continued to climb much faster that exports, ever though the price of imported oil has declined substantially.

The October deficit alone widened by $3 billion to reach $68.9 billion. Currently, imports are about 60 percent higher that exports, meaning that the U.S. would have to increase exports by more than 60 percent to keep the imbalance from growing larger. The new figures ignited another round of political accusations in Washington, with Democrats suggesting that President Bush is too soft on countries like China. These Democratic voices, along with some Republicans, call for more protectionist measures from the President.

“Small business owners in Maine and across the nation are fighting to remain competitive with countries such as China that flagrantly disregard fair trade practices,” said Senator Olympia J. Snowe, Republican of Maine. According to Treasury secretary John W. Snow, the administration is pushing countries like China, but the trade deficit is largely a result of slow growth in other countries. “If our major industrialized trading partners were growing faster, the U.S. wouldn’t have such a large trade gap,” Snow said.

Questions
1.

Discuss Secretary Snow’s statement that the deficit could be improved if other industrialized trading partners’ economies were growing faster.

2. How does the expanding trade deficit threaten to hamper U.S. growth?
Source Edmund Andrews, “Trade Deficit Hits Record, Threatening U.S. Growth”, The New York Times Online, December 15, 2005.
Instructor Discussion Notes Discussion Notes
These notes are restricted to qualified instructors only. Register for free!

Return to the International Trade Index

©1998-2006  South-Western.  All Rights Reserved   webmaster  |  DISCLAIMER