AN ASSESSMENT OF THE UNITED STATES’ PROFILE IN TRADE STATISTICS

QUESTION

Knowing the trade profile of a country can help global businesses assess the country’s trade potential from a different point of view, as a potential market or a place of manufacturing. The World Trade Organization International Trade Statistics is an annual report that provides statistics on trade in merchandise and commercial services.

Directions:

• Using the most recent statistics available, identify the profile of the United States. Evaluate how the United States stands in these statistics and assess what can be done to improve its position and provide recommendations.
• Your assignment should be a paper two to three pages long, not including the required title and reference pages.
• Adhere to the CSU-Global Guide to Writing and APA.
•  Include at least three scholarly sources (you may use the recommended readings) to support your answers. The CSU-Global Library is a good place to find these sources. Remember to use in-text citations as appropriate and to include your sources in your reference page.

ANSWER

An Assessment of the United States

Introduction

The world trade statistical review is a yearly published document which details the upcoming trends in world trade, the latest rankings of various countries in world business, and the latest developments in trade (World Trade Organization, 2005). In this review, data from the World Trade Statistical Review 2017 is used. During the compilation of this report, recent trends in trade and many issues affecting major players in world trade, such as the United States, came out apparently. This review will only focus on the United States.

A study into how the US dollar has been fairing to other world currencies shows that its exchange rate has been rising at a constant rate since January 2014 to February 2017. This appreciation significantly contributed to a decrease in the dollar prices for goods, meaning that a certain quantity of products purchased in the year 2012 could be bought in 2017 with a lesser amount of currency. The import-driven market in the US was observed to have mostly remained constant since the year 1995 to the year 2014, with only a slight rise in 2011. This surge was however followed by a sharp decrease in the imports in 2012 and 2013, with graphical representation provided in the World Trade Statistical Review. The larger North America’s imports have also remained flat since 2015 to 2017. Some of the factors that greatly influenced this flat-lining included the decrease in exports of minerals and mining products, and fuels (petroleum, gas, and coal), caused by a decline in the prices of goods in 2015 (Alam, Paramati, Shahbaz, Bhattacharya, 2017).

Merchandise exports from the US and the larger Northern America have significantly stagnated over the years. A slight growth pattern was observed from 2012 to 2016. However, more than 34% of the total US merchandise exports went to two of its NAFTA partners, Canada and Mexico, resulting in a trade deficit of more than US$ 67.7 billion (in goods) with Mexico, and US$ 20.4 billion with Canada (Villareal, Fergusson, 2017). The United States exports of transport services, machinery, and cargo increased gradually since 2015, but China and the Middle East countries have largely grown and controlled this section of industry (Baldwin, Lopez‐Gonzalez, 2015). In 2016, there was very little GDP growth in the US due to the continued decline in oil prices and very low rates of new investment in the US, especially in the energy industry. However, from October 2016 to January 2017 when the review was compiled, merchandise exports and imports in the US have shown a gradual rise, with the expectation of further increase throughout 2017. The US, however, remained a net importer of food throughout the review period of 2014 to 2017.

Recommendations for the Improvement of Trade and Industry in the United States

Exports are one of the main contributors in the growth of a country’s economy, viability for investment and GDP. The world trade statistical review of 2017 has shown that the exports of the US have largely stagnated over the past two to three years. The trade authorities in the US should focus on improving the local market, to ensure that the number of merchandise exports increases. Investment in human capital should be looked into, with the aim of improving and deepening the knowledge and education of American metropolitan residents (Pierce, Schott, 2016). This should be done to encourage growth in science and engineering and innovation. This will result in foreign investment as a result of newly acquired business skills. The US government needs to increase the availability of business loans to entrepreneurs, and better tax credits for industrial and business development. Ease of access to capital is directly proportional to the rate of investment (Cingano, Manaresi, Sette, 2016).

A large trade deficit exists in the US. This needs to be reduced greatly, as it directly affects the trade rankings and development of a country. Reducing the exchange rate of the dollar may help in reducing this trade deficit, as depreciation increases the cost of imports and reduces the cost of exports. Regulations that improve the manufacturing competitiveness of the United States to other nations should be put in place. An expansion in high-skill immigration will help in the production of better quality manufactured goods in the US. An increase in the availability of loans and other forms of funding, and controlled lower interest rates and taxes by the government (on investors) shall also have a great effect on the investment potential of the US market (Jaimovich, Rebelo, 2017).

References

The World Trade Statistical Review 2017.

World Trade Organization. (2005). International trade statistics. World Trade Organization.

Alam, M. S., Paramati, S. R., Shahbaz, M., & Bhattacharya, M. (2017). Natural gas, trade and sustainable growth: empirical evidence from the top gas consumers of the developing world. Applied Economics, 49(7), 635-649.

Baldwin, R., & Lopez‐Gonzalez, J. (2015). Supply‐chain trade: a portrait of global patterns and several testable hypotheses. The World Economy, 38(11), 1682-1721.

Villareal, M., & Fergusson, I. F. (2017). The North American Free Trade Agreement (NAFTA).

Pierce, J. R., & Schott, P. K. (2016). The surprisingly swift decline of US manufacturing employment. American Economic Review, 106(7), 1632-62.

Cingano, F., Manaresi, F., & Sette, E. (2016). Does credit crunch investment down? New evidence on the real effects of the bank-lending channel. The Review of Financial         Studies, 29(10), 2737-2773.

Jaimovich, N., & Rebelo, S. (2017). Nonlinear effects of taxation on growth. Journal of Political Economy, 125(1), 265-291.