Question

U.S has faced a negative trade balance (Trade Deficit) since 1990’s. Is Trade Deficit necessarily bad? Is Trade Surplus necessarily good? President Donald Tramp proposed to re-negotiate North American Trade Agreement (NAFTA) and recently he withdrew U.S. from Trans-Pacific Partnership (TTP) trade deal. Do you think the U.S. withdrawal from TTP and the renegotiation effort on NAFTA will help U.S to reduce the trade deficit?

Answer 1

NO, Trade deficits are not bad and do not always imply unfair trade Its just good free trade to import those things which you cannot produce cheaper

No, the trade surplus is not necessarily good as In the case of Germany and Japan it reflects weak domestic demand

It might help to reduce the trade deficits of specific industries but its effect on the overall market is going to be bad as the prices of the goods will increase which will majorly affect the consumer

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