Effects of Curtailing Imports
The U.S. trade deficit has been widening mostly due to the politically triggered imbalance with China.
It is not a skillful idea to further cut down imports to the U.S. by 20% due to many reasons. For instance, China is the country that the U.S. fights most with to balance their trade.
By cutting down their imports, the reaction to this change will only stimulate rising speculation of currency hostilities. In the last 5 years, living standards for both low and high income earners have been rising at the same rate. Over 80% of employment creation jobs include professions that compensate higher than the normal earnings ever since 1993. Statistics pertaining to a fall in real wages are false, because they exaggerate inflation and do not take account of the increase in nonwage payback. Therefore, import curtail would have a negative effect on the living standards of citizens resulting from decline in the employment rate. Foreign investors would also have a second thought before investing their money in the U.
S. market since they would have low returns. The only approach in sinking the trade deficit is if the U.S. consumers reallocate their expenditure of foreign goods to the U.S.
manufactured goods. There should be an increase in the demand of the U.S. based goods.