Question

United States has large trade deficits with many countries. Discuss at least two reasons for the trade deficit. Note: Your discussion must be based on positive economic analysis. Avoid interjecting your own personal opinion.

Answer 1

I believe that the two most important reasons for the US trade deficit are:

The US is the largest economy in the world and the dollar is a currency that is accepted virtually everywhere. A solid economy (reason #1) plus a strong dollar (reason #2) results in many goods purchased by Americans. Until the beginning of 2020, the US economy had been growing for more than 11 years in a continuous manner. Such long economic expansions are not common, and they clearly show that the US's economy was healthy (at least until 2019 ended).