Analysis Of The Article The Trade Deficit Isn t A...

In the US News article â€Å"The Trade Deficit Isn’t a Scorecard, and Cutting It Won’t Make America Great Again† by Neil Irwin, economics and politics meet as presidential candidate Donald Trump’s economic policy is scrutinized. Part of Trump’s plan to make America great again is to eliminate the trade deficit (Neil, 2016); Irwin disagrees. Irwin argues that the trade deficit is not bad at all because it allows the United States to have lower interest rates, which spur foreign investment. Additionally, Irwin counteracts Trump’s theory that a trade deficit means fewer jobs and therefore a declining economy. Irwin argues that the trade deficit does not mean a declining economy, but rather, it is what is done with the money flowing into the US†¦show more content†¦Trade is how goods or services are exchanged between countries. An exchange is broken down into two categories: imports and exports. Imports are goods and services coming into a country; whereas, goods and services flowing out of a country are exports. When different countries trade with each other, they develop a trade deficit, a trade surplus, or a trade balance. A trade deficit is when the value of imports exceeds the value of exports, and a trade surplus is when the value of exports exceeds the value of imports. A trade balance is when imports and exports are traded at equal rates/amounts. While it is ideal to have free trade, which is trade without any restrictions upon it, it is not that simple. Instead, there are tariffs and quotas that prevent free trade. Tariffs are taxes on imports, and quotas are a limit on the quantity of a good that can be imported during a given time period. Tariffs and quotas exist because governments may prefer that their products be sold nationally more than another country’s products to help their own economy. Their own economy is helped because more jobs can be given to that country’s workers instead of a nother country’s workers. While quotas and tariffs may help boost a country’s economy, free trade allows for reduced prices, less inefficiencies, and increased consumption worldwide. With tariffs, the supply curve remains level as the price level never changes due to the extra-tax upon imported items. It should be