Recession’s effect on trade balance
TEXT OF STORY
Scott Jagow: So much has shifted during this economic fallout.
Speculation and risk have given way to Treasury bonds. Concern about inflation has morphed into concern about deflation. And the U.S. trade balance with China and other countries has shrunk from the Grand Canyon to most of the Grand Canyon. We get the latest trade deficit this morning. Here’s Marketplace’s John Dimsdale.
John Dimsdale: A weaker dollar and growth overseas have boosted U.S. exports by 15 percent. And the sputtering U.S. economy means fewer imports. Could more balanced trade be the silver lining in the current recession?
Peter Navarro: More like a silver bullet.
Economist Peter Navarro says China is moving quickly to prop up U.S. demand.
Navarro: In the last few months, they’ve significantly raised their export subsidies and they’ve significantly devalued their currency relative to the dollar. It’s not fair trade and it’s not good for America.
Navarro says struggling consumers will snap up cheap Chinese products, keeping the deficit high. And that’s fine with economist Dan Griswold at the Cato Institute. He says foreign countries that make money off the U.S. then invest it here.
Dan Griswold: The negative side of balanced trade is we’d have less capital coming into the United States and going to work here in our own economy.
Griswold says the U.S. benefits when trading partners have a stake in strong U.S. demand for their products.
In Washington, I’m John Dimsdale for Marketplace.
Stories You Might Like
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.
