Basically when a good product or service is produced, say, Brazil and is sold to a person or business in the US, that counts as an export of Brazil and as an import from the US. As you might expect, the United States is the world's largest retailer because Americans love their stuff. In 2014 Americans imported more than $ 2 billion worth of goods, such as oil trucks and clothing from countries around the world. And when you look at your local big box shop, it sounds like everything is made in China. We also import a lot of goods from China but both exports, and we export our main trading partners are not China, it is Canada. The US and Canada trade more than $ 600 billion in goods and services each year. The US imports most from Canada but exports almost exclusively. In fact, the United States is the second largest exporter in the world. It sells high-tech products such as medicines, jet engines, generators and aircraft to countries around the world. It also exports smart goods such as Kanye West albums and Pixar movies as well as a host of goods such as corn, oil and cotton. The annual difference between exports and exports is called net exports. So if Brazil exports goods worth $ 250 billion and imports $ 200 billion, its exports are $ 50 billion. That means Brazil has more trade money. In 2014, total exports to the US peaked at $ 722 billion.
That's what they call the lack of trade. Some people think that the shortage of trade is inherently bad. Why does the US import almost all clothing? Why can't we dress ourselves? American manufacturers can easily make more than enough clothes to keep us all wearing. But they do not do that because they are so focused on other things that they are better at producing. The US buys clothes from other countries because we can find them cheaper than we do here. This is the importance of international trade. It does not make sense to do everything alone if you are able to trade with other countries with comparative advantages. It is worth mentioning here that this savings sometimes come with additional costs, especially for people who are producing these goods overseas. Unsafe and unfair working conditions, as well as environmental degradation can be detrimental to international trade. And we'll talk about that. For now though let’s get a handle on the lack of trade. It may seem that exports can make the country richer while imports can make it poorer. After all, when we buy locally produced goods there are overseas shipping services, right? Just fine to some degree.
Suppose I have the option to buy an American made TV or a TV made in Malaysia. Due to low labor costs in Malaysia, imported TV costs $ 200 less than the American manufacturer. So I bought an imported TV. That might cost jobs in a TV factory in the US but I saved $ 200 by buying an imported TV. And what will I do with that $ 200? I will spend it on something I could not afford if I bought a US TV. Like maybe I took my family out to a baseball game or to a restaurant. That creates job opportunities in those industries that would not exist if I bought a more expensive TV. Economic theory suggests that international trade shifts jobs from one economic sector to another, such as from a TV factory to a restaurant. But the level of these activities can vary significantly. The man who manufactures TVs at a US factory probably did most of his production work before being re-assigned to the burrito assembly line at Chipotle. Which is to say that all of this is complicated and the good in the compilation is not good for the individual. For example, see the North American Free Trade Agreement or NAFTA. It was established in 1994 to reduce trade barriers between Canada, the United States and Mexico.
Critics point out that NAFTA has significantly increased trade deficit in the US and that it has reduced the number of manufacturing jobs in many countries, as companies are out of the US. Proponents of free trade point out that the US economy flourished during the 1990's, creating millions of jobs, including manufacturing, and that free trade has reduced the prices of all kinds of commodities, from vegetables to cars. So despite the fact that some workers and industries are clearly injured, an economist will tell us that NAFTA has had a positive impact on all three countries. Debate over a number of specific trade agreements is ongoing. But it is unlikely that the world's largest economy will return to strong security. Defenders' policies, such as imposing higher prices on exports and restricting the value of their exports, often do more harm than good to the economy. There are now several organizations designed to end protection, especially the World Trade Organization or the WTO.
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