Q1. Quantitatively, how important is... [FREE SOLUTION]

Chapter 20: Q1. (page 430)

Quantitatively, how important is international trade to the United States relative to the importance of trade to other nations? What country is the United States鈥� most important trading partner, quantitatively? With what country does the United States have the largest trade deficit?

Short Answer

Expert verified

International trade is essential for the United States because the export of the United States is much lower than other industrial nations.

Canada is the most important trading partner of the United States.

The United States has the most significant trade deficit with China.

Step by step solution

Step 1. Importance of international trade to the United States

International trade is essential for the United States for the lower export rate compared to other nations. The United States export 12% of the total produce, i.e., GDP, whereas Japan exports 18% of the whole production. Japan and the United States both have large population; thus, they have substantial domestic consumption. Other nations like Belgium, Netherlands, Germany, Spain, Italy, Canada, France, the United Kingdom, New Zealand, have higher export than the United States. As the export brings revenue to the nation; hence, the United States needs to increase the export which is comparatively very low

Step 2. Trading Partner

A trading partner can be an individual or any nation with whom an individual or the nation trades. The important trading partner for any nation will be the nation with whom more value of the transaction is accounted. Canada is an important trading partner for the United States as the highest percentage of export is to Canada, i.e., 15% of total export.

Step 3. Trade Deficit

A trade deficit means that the nation has more imports than export. The United States has a trade deficit in goods. In 2018, the trade deficit was $891 billion. The highest trade deficit of the United States is with China. The United States has a $419 billion trade deficit with China.