US Trade Deficit Widens Slightly to $38.8 Billion - ABC News

US Trade Deficit Widens Slightly to $38.8 Billion


This article is great for a very to-the-point analysis of how our trade deficit with China is doing, and for providing many specific figures.

A trade deficit is when a nation (like the US) is importing more from a certain country (like China) than it is exporting to that same country.

Trade deficits can be harmful because they can give one side an advantage over the other. This is because the nation that is importing is left very vulnerable. For example, if we suddenly could not trade with China, we would be hurt more because we are more dependent on them than they are on us.

While the article discusses how the gap actually widened a bit in August (though only by $0.2 billion), the overall deficit is down 10.8% from last year's. This is a great sign because it indicates that American companies are making more money on their exports to China.

Personally, I think we can do even better. I believe that one way to curb the growing power of China is to slowly close the trade deficit. That way, either by increasing their dependence or decreasing ours (preferable), we will be protected if things go badly. Plus, increased mutual dependence can increase the likelihood of stability in our relations.

However, trade deficits aren't always a bad thing. As a consumer nation, having a trade deficit simply reflects the nature of our current economy which focuses on the sale of goods and services rather than the production of them. Trade deficits with certain regions also may imply we are maximizing efficiency by focusing on regions in which we can make the greatest profit.

What do you think? Should we always try to eliminate trade deficits? Do you think closing the trade gap with China is important? Thoughts appreciated.