International Trade and Finance Speech
ECO 372 – Principles of Macroeconomics
International trade has a important impact on the economical status of the United States. While the U.S. had previously been a creditor, lending monetary resources to other countries, a decline in economic conditions have caused our country to become in debt, owing millions of dollars in interest payments to other countries. Many imported goods received from other countries have resulted in a surplus. Most surpluses are needed to help offset deficits and slow down the economy.
When there is a surplus of imports that are brought into the United ...view middle of the document...
The opposite occurs when Americans are not spending much money. Domestic import markets also increase as the value of the American dollar increases.
Government choices in regards to tariffs and quotas affect trade and international relations by allowing the United States to decipher between the world supply and domestic supply. Due to the protection from the government, domestic markets do not have to be worried about competition from foreign producers who produce a better quality product at lower prices. However, too many restrictions on imports with trading partners could cause a foreign nation to respond in a negative manner by making the U.S. pay tariffs on goods, which would cause the U.S. to pay millions of dollars for imports. Also, international trading relationships are not affected because free trade agreements allow countries to buy and sell goods at a fair market value.
Foreign exchange rates are the rates one country’s currency may be exchanged at to another country’s form of currency. It is the economic measure imposed by the government, which plays a very important role in the balance of a country’s trading activities. A decline in the exchange rate decreases a country’s purchasing power of returns from income. Foreign exchange rates are affected by the interest rates the country imposes for currencies because of the demand and are influenced by central banks. Foreign exchange rates are determined by factors such as high interest rates, low productivity, debt by our country and inflation hikes. Higher currency rates increases a country’s costs of exports and decreases the costs for imports. Lower currency rates decreases a country’s exports and increases the costs for imports. Higher exchange rates are...