United States has a large deficit with many of its trading partners; yet, the deficit will continue to exist or may even grow larger in foreseeable future. Discuss why.

All economists agree that having a trade deficit is not something good, but if you look at the US's trade deficit, even though it is not good, it is probably the lesser of evils.

For example, the trade deficit with China is the result of the US buying more goods from China than what it is selling them. But American consumers benefit from the low price of Chinese products. If these imports didn't exist, American consumers (including individuals and businesses) would probably hurt more than having a trade deficit. The same probably applies to trade with Mexico and others.

On the other hand, if the US has a trade deficit with European countries that do not sell cheap goods, but instead sell BMWs or Mercedes Benz cars, then hat is something serious. This is probably considered a negative trade deficit because good cars are also produced in America, and not only by Ford or GM (the only 2 remaining American car manufacturers), but there are also Japanese and European car manufacturers producing in America.

Depending on the good that is being traded, a deficit may not be so bad or it can really represent a serious issue. The trade deficit with China or other countries that produce low cost goods is not bad nor will it decrease in the future. To be honest, I believe that it will increase more and more every year. But the trade deficit with certain countries should be targeted just as the trade deficit with Japan was targeted during the 1980s and 1990s.

When Honda (and then Toyota) were practically forced to open factories in America in order to keep selling cars, everyone won. Japanese car makers won, US consumers won, and the US economy won. That should be done with European car manufacturers and possibly other industries. But building one or two types of cars in the US just to say that they also have domestic manufacturing facilities is not enough. If BMW wants to sell cars in America, at least 90% should be made in America, just like Japanese car makers do.

This is just an example of how trade deficits are not all good or bad, it depends on the product. But unless something is done fast, it will continue to grow and the bad deficit will keep hurting the economy.

correct, but each time you dont pay the price of the penalty can increase.

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