Discuss non-monetary benefits open trade has contributed to the world since the end of WWII.
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Discussion – Benefits of Open Trade
Respond to the following in a minimum of 175 words:
#1
Discuss non-monetary benefits open trade has contributed to the world since the end of WWII. Provide at least 2 examples. Why do you think these are important?
How have changes to US trade and tariff policies affected US trade with other nations? Consider recent (less than 2 years old) credible news sources to support your response.
#2 GR
Trade provides more goods and services to people, this is not a direct monetary benefit. Over time, those goods and services create competition with lowers the price of local goods. A good example is more goods provided by china. The cost to produce these products is cheaper, so there is a cheaper alternative buying US goods. The common assumption is lower quality, but on something like a fan or a clock that might be acceptable. Cheaper goods allow people to have more money to spend.
Relationship building is another key to trade, it is a safe argument to say we are less likely to go to ware with countries we have great trade partnerships with. I think about India and how we have outsourced work to their country.
Their would be far reaching negative affects if all of that had to end overnight. There is a vested interest in governments keeping that relationship strong. Companies from both countries would strongly lobby to resolve whatever conflict existed. There is also tax money on the line for both countries if these relationships fail. The most recent example is trade with China, we had a large trade deficit with China. We are still importing significantly more than we are exporting. Part of the argument made was significantly higher tariffs for our goods going into China that our tariffs on goods coming out of China.
During the Trump administration tariffs were raised 19% on 66% of goods. This has decreased the deficit, but it has not changed it significantly. China agreed to purchase $200 billion in American goods per year for two years and lowered import tariffs. I think this was overall a positive change, while it might not be long lasting. We do not want to have large trade deficits with our partners. However, I think this probably overly strained the relationship due to how it was handled in the media and by the politicians.ReferencePeterson institute for International Economics(March 2021)US-China Trade War Tariffs: An Up-to-Date Chart https://www.piie.com/research/piie-charts/us-china-trade-war-tariffs-date-chart
#3 BR
Open trade helped consumers with more choices and satisfaction. While it requires companies and workers to adapt to worldwide marketplace demands, consumers benefited from products and prices. Competition is critical to long-term improvement and diverse options. It has the propensity to provide better quality and affordable pricing. Open trade improves efficiency and innovation. Companies are attempting to be more competitive; they have to think outside the box to save money in the production process and find resources to streamline processes, make the best use of resources, and support modern technology. An advanced market creates new jobs and opportunities. The New York Times stated that the trade deficit shrank over the last year due to President Trump’s efforts to modify trade terms. The impact of tariffs affected companies worldwide as imports and exports fell. American companies struggled to operate as they could not affordably gain access to raw materials that had to be bought from countries such as China, Mexico, the EU, and even our closest neighbors, Canada. Even crude oil was a significant factor in the trade deficit as imports lost billions of dollars. Trade with China has impacted the most over the years. President Trump intended to produce factory and construction activity with less effort from China. In many cases, that occurred, but it certainly didn’t have the intended impact. As a result, American’s have been able to find the goods they desire in other countries.
reference from WTO | Understanding the WTO – The case for open trade
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