Eco/372 International Trade and Finance Speech
International Trade and Finance Speech
Foreign exchange rates and International trade are important aspects of economics. The United States macroeconomy’s health is determined by these concepts and their factors.
Exports and imports are what encompass international trade balance. When there are more exports over imports a trade surplus happens and when there are more imports over exports a trade deficit happens. A country will acquire large quantities of foreign assets when it runs in a trade surplus so it can lend internationally to other countries. A country sells of its assets to other countries and becomes a big debtor nation when it runs on a trade deficit. A …show more content…
To solve issues posed by the trade deficit and to protect domestic businesses, the government chooses tariffs and quotas. Tariffs are taxes imposed on international goods and quotas are limits on the number of goods that can be exported from other countries to the U.S. If the government implements too high of tariffs, international trade may weaken. Foreign businesses may no longer trade their products to the U.S. because of the high taxes. This can also weaken the international relations between the participating countries. High quotas, on the other hand can strengthen international relations and trade because it means that international businesses can export more products to the U.S. The government benefits from a tariff because they will reap the revenue from it. Domestic businesses also benefit from it because foreign competitors are prevented from selling products at prices that are too low and that will not match those of domestic products. Quotas can benefit domestic businesses also because they can retain a percentage of the market share. This in turn will help the citizens of the country because they can retain their jobs from domestic businesses because of tariffs and quotas preventing domestic companies from closing or reducing their employees. Consumers may