balance of trade

Donald Trump is trying to put more pressure on Japan, Germany, and some other countries that have unfavorable balance of trade with America. This pressure will force this country to buy more commodities and military supplies from America to increase the percentage of employment rate and to reduce 500 million dollars unfavorable balance of trade.

Unfavorable balance of trade means a country’s foreign savings are reducing. Its commodities have less competitiveness which is effective to its ministry of foreign trade. If the trade is going too bad will fasten the loss of domestic resources which will increase the IRS and affect national economy. If a country always has unfavorable balance, its currency will be devalued which will bring the outflow of national income.

The reason why Trump is putting lots of pressure of Japan is they have many trade disputes. The cost of trade disputes is America’s economy is too prosperity and its needs of society is huge. Compare to America, Japan doesn’t have a good prosperity national econemy like America so Japan needs to buy commodities from America to satisfy its needs of society. However, their needs of society don’t need much military supplies from America. Those commodities are not as expensive as military supplies so America can’t really get much money from selling those so Trump is trying to force Japan to buy more military supplies to fill the huge holes of IRS.

Furthermore, when Japan is buying more commodities from America, it needs more money from America too. So “dollar” will become more and more valuable than before because everyone is buying from America which mean giving America its currency back and makes the currency value more.

The outcome of this is inflation. If America’s currency keeps going up, no one will end up buying anything from America because is too expensive. If a country has no income, it has to borrow money from other country which put more pressure on people, people need to pay more tax. It is a vicious cycle for America. America already has a huge IRS, it can’t have anymore.

Put away Japan, China is also has an unfavorable balance of trade with America. This is one of the reason the rate of currency of China value so less to America like 1 to 6.88 now. This is not good to both country so both countries are trying to find a way of likely balance of trade to bring up the value of RMB and lower the value of dollars.

Nothing is absolute good. Both favorable and unfavorable are not good if they are out of control. Although favorable balance of trade might sound good, it can always brings dispute to national economy. Even when a country gets lots of other currencies, it might can’t use is completely. If it doesn’t use any other currencies, it is also a waste of money. Favorable balance of trade will increase the value of currency just like America. When the currency reach the highest point, it is zero. Just like you have all the abilities of drawing, everyone consider you as a great drawer but no one will pay you to draw a picture for them.

The balance of trading is hard to control and every country is trying to make a likely balance trading with every other countries. Trump is doing thing on a right way this time just like what a business man should do as a president.