The Importance Of International Trade To The United States

960 words - 4 pages

International trade has always been very important to the United States in regards to their economic health. The United States has gotten a lot of imports, mostly from the countries of china and Japan, which supplements the United States’ economy. The United States has imported more goods from other countries more then they exported goods to. The United States recent data regarding imports and exports is that exports made nine percent of the United States’ GDP and 15 percent of GDP is made up of imports. In comparison to other countries, The United States is the leading exporter of products around the world with eleven percent of world exports being taken up by the United States. However, ...view middle of the document...

Japan’s opportunity cost of making one Playstation 3 would be one-half of an Xbox, whereas the opportunity cost of Japan making one Xbox would be two Playstation 3s.
Impact of a tariff
The basic meaning of a tariff is a tax on goods that has been imported by one country. The imposition of a tariff on imported goods does mean a complete loss on the consumer surplus on the market for that imported good. That same tariff will cause a producer surplus for the good that the producers are exporting. The tariff also causes the government of the country who imposed the tariff to get a revenue increase overall by the imposition of the tariff on that same good that was imported. This is one of the ways that the government of one country that could impose a trade barrier on imported goods, through a tariff.
Workings of a Quota
A quota is an arbitrary limit on a good that limits the number of a certain good that comes into the country where it is imposed. The quota does do a great deal of harm on people who want to export a good to a country where that quota is imposed. The group that is impacted the most is the consumers who want to consume the product in which the quota is exposed upon. There would be a total loss of consumer surplus that would have been held by the consumers, but the domestic producers of that product and the international exporters would gain a producer surplus out of the products that they were making and/or importing. A lesser version of a quota is called a voluntary export restraint. It has the some effects of a quota, but it is voluntary and mutually agreed upon the two countries that are trying the product that will undergo the restraint. Tariffs and quotas could be used by the government to save certain...

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