The US has accumulated a trade deficit amounting to $12 trillion in goods since 1990 (Corbat). Last year, for instance, the US had a trade deficit exceeding $800 billion in goods. However, the above figures are immaterial since the country exports more services to its trading partners.
The relevance of this editorial post is to show that a trade deficit in goods is not necessarily a bad thing for a developed nation with high consumption like the US (Corbat). A high trade deficit in goods does not necessarily hurt US consumers and workers since it simply implies that the US households have a high disposable income and this explains their immense purchasing power.
I agree with the opinion of the author that it is wrong to focus entirely on the high US trade deficit in goods alone while ignoring its surplus in service. It is common for developed nations to experience a high trade deficit in goods due to high consumption. As earlier mentioned, a trade deficit in goods alone is not entirely a bad thing for advanced economies like the US since this is usually caused by the high purchasing power of the consumers.
Based on recent statistics, the average US household has an annual net per-capita income exceeding $60,000. While the net income of a Mexican household is approximately $13,000. This goes to show that the US consumers have immense purchasing power and thus have a greater capacity to purchase more goods as compared to consumers from its major trading partners such as Mexico. On the other hand, the US has had a significant trade surplus in service over the years. In the modern world, most investment opportunities are in the service industry. Among the key sectors in the service industry include the software service sector, health, communication, accounting, and legal service sector. As such, in today’s technology-oriented world, it is unfashionable for a country to be concerned with a trade deficit in goods alone.
Work Cited
Corbat, Michael L. "Argument about the balance of trade often focus only on goods. That misses half the equation ." America Has a Surplus in Services (2018).
