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USA Trade Policy Assignment Assessing Areas Of Improvement


Task: How can the USA reverse its current trade deficit?


The trade policy assignment will evaluate the USA trading policies and their effects on economic development and growth. The USA has been viewed as the dominant world power for many decades, but the recent difficulties have raised significant concerns linked to the USA’s economic state. This is because the US has experienced a financial crisis and has continuously lost its market share in the global trade industry. This has been attributed to many aspects linked to the US economy and attitude towards international trade. Either way, the US has been sighted to continually lose its market share, resulting in the nation losing its economic trade domination on the global trade market (Mestral & Lévesque, 2013). The trade policy assignment will focus on the USA and reasons the nations are likely to face a severe trade and industry crisis in the future and why the government must reconsider its trade policies to rejuvenate trade within and outside the US. It will help the nation generate income from the industry, which will also create employment and improve US citizens' financial stature. The trade policy assignment will evaluate each policy to help deliver more favourable conditions to the industrialists that invest in the USA. Currently, industrialists are concentrating on other markets simply because they offer better opportunities; this results in the US and Europe losing out on most industry and manufacturing units.

Relaxation of Immigration Laws
One of the main reasons linked to the USA current industrial depression is its failure to manufacture and process finished products at a competitive price. It is leading to products made in the USA, costing considerably more than those manufactured in Asia. The main problems associated with the crisis identified in this trade policy assignment are the high cost of labour in the USA. It results in manufacturing products and services, costing higher than the Asian countries (Hong & Milgram, 2011). The Asian countries are still capable of exporting the products to the US markets for a cheaper rate than it would cost to manufacture the same in the USA. With this problem at hand, it’s critical for the USA to adopt strategies to help the USA reverse the situation and improve manufacturing in the country.

Invite foreign talent
The USA has been noted to be among the most challenging countries to migrate to, and this has resulted in the nation experiencing a major industrial slump in recent years. In this trade policy assignment, many professionals are unable to migrate to the USA, which has left a few skilled professionals in the nation, taking advantage of the situation and charging extra. It is only happening due to the limited talent, forcing the industries to pay more to keep their talent. In turn, this reflects on production cost, resulting in the US failing to manufacture products at competitive prices. The solution is quite simple and will significantly impact the country’s economy and industry (Koh, 2010). Inviting skilled professionals to migrate to the USA will flood the market with professionals who will automatically reduce employment rates and costs associated with the skilled worker. As more skilled professionals enter the nation, a large majority of enterprising professionals will also set up their small businesses which will gradually reduce the cost of manufactured products due to brand competition.

Increase consumers
This trade policy assignment also identified that reversing the USA industrial crisis can be achieved by inviting more skilled immigrants to the USA. Having a large population was considered to be a disability in the past. Still, this attitude has changed in recent years, whereby large people have proven to be critical consumer market assets. Both China and India were viewed as overpopulated in the past (Watson & Carter, 2006). As the per-capital and GDP have increased, the ordinary person can afford most consumer products, resulting in the creation of a vast consumer market. It has resulted in the nation’s suddenly becoming important consumer markets which major international brands are looking to tap into. Today most prominent global brands turn to expand in Asia before considering Europe or the US. It is due to the sheer number of consumers in the market. With this in mind, allowing people to migrate to the US in large numbers will increase the population, increasing the demand for consumer products within the nation (Watson & Carter, 2006). While collecting data and research for this trade policy assignment, it is identified that more people and skilled professionals automatically results in lower labour and manufacturing costs. This then reflects automatically to improve the USA industrial competitiveness.

Role of Taxation laws identified in this trade policy assignment
High taxation rates in the USA are another issue identified in this trade policy assignment. High taxation rates result in local industries experiencing significant cost increases only due to taxes. To help reverse the current industrial crisis, the US needs to eliminate taxation on manufacturing and hike taxes on importation, thus promoting the nation's domestic manufacturing. The USA has also been noted to have a limited number of industries (Wittendorff, 2010). Currently, the USA main industrial export is linked to military hardware. The US is today the biggest exporter of military hardware and exports across the globe. The US also produces many food products that are mainly consumed within the nation and donated as a relief to countries that are experiencing famine and disaster. It is simply due to the US crops prices failing to be competitively priced for the consumer, which results in the crops failing to attract consumers and buyers (Mol & Buuren, 2003). As per the research performed in this trade policy assignment, USA trading policies must be re-evaluated to reduce taxation. It will then have a direct cost reduction effect on the manufacturing sector in the nation.

Devaluation of the Strong Currency.
Having a strong currency was viewed to be very beneficial in the past, but this has proven to be a significant challenge for countries with high currency valuation due to them simply not being attractive and affordable for the consumer. In this trade policy assignment, countries with high currency value experience increased costs which result in the country losing its price advantage in the market. An example of this is China which has refused to appreciate or increase its currency value only due to this directly impacting manufacturing costs in the nation (BRILL, 2013). While raw materials may remain at the same cost, the central negative aspect linked to high-value currencies is the cost of manufacturing, processing and labour. While a US firm requires paying an IT professional a minimum of $15 per hour, a higher qualified IT professional in India receives $15 per 8 hour day and more than happy to work for this rate. It results in labour, manufacturing and processing costing between 5 to 8 times higher in the US than in Asian countries like India and China (Moore, 2010).

Relocate All Industries to Developing Economies
Another viable strategy identified in this trade policy assignment to help reverse the USA trade crisis is relocating the industries to Asian markets. Many major brands like Wal-Mart have already relocated its manufacturing units to Asian markets so as to secure competitively priced products to sell to customers in the USA (Mol & Buuren, 2003). It would also mean the USA would lose its industry resulting in increased unemployment rates. It would now mean the USA would require considering alternative initiatives and income-earning approaches that citizens and professionals could utilize to generate income. The USA is already facing a significant crisis linked to rising unemployment rates, but this can be reversed if radical action is taken to curb the problem. While poverty and unemployment are rising in most developed countries, developing and underdeveloped nations are also experiencing reduced unemployment rates. It is due to the nations turning to a different strategy where skilled professionals are encouraged to set up and start their small businesses (Kabeer, 2002). It helps the individual avoid being dependent on employment and generate income even while they fail to secure a job.

The US and many other Developed nations are now facing significant complications linked to industry development and expansion. It is because developing countries like China have captured the entire manufacturing industries resulting in many US companies contracting China to manufacture the consumer products. While this may be working, the future looks bleak since US citizens require working and generating income to buy the products. With employment from all industries reducing in the USA, this trade policy assignment identifies self-employment opportunities as the primary mode of reversing USA trade and income issues.

BRILL. (, 2013). Asian Tigers, African Lions: Comparing the Development Performance of Southeast Asia and Africa. Boston: BRILL.

Hong, E., & Milgram, R. (2011). Preventing Talent Loss. New York: Routledge.

Kabeer, N. (2002). The Power to Choose Bangladeshi Women and Labour Market Decisions in London and Dhaka. London: Verso.

Koh, A. (2010). Tactical Globalization: Learning from the Singapore Experiment. Bern: Peter Lang.

Mestral, A., & Lévesque, C. (2013). Improving International Investment Agreements. Oxon: Routledge.

Mol, A., & Buuren, J. (2003). Greening Industrialization in Asian Transitional Economies: China and Vietnam. Oxford: Lexington Books.

Moore, G. (2010). Fairness in International Trade. Durham: Springer Science & Business Media.

Watson, R., & Carter, J. (2006). Asset Securitisation and Synthetic Structures: Innovations in the European Credit Markets. London: Euromoney Books.

Wittendorff, J. (2010). Transfer Pricing and the Arm's Length Principle in International Tax Law. Alphen: Kluwer Law International.


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