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Comp 3/Module 6 - Reflection
University of Phoenix
ECOCB/535: The Digital Economy
, 2
Comp 3/Module 6 – Reflection
The United States continues to have a large trade deficit with most of its largest trade
partners. There is much dispute regarding the perception, necessity and even validity of the trade
deficit. This is especially true when considering the United States’ largest and most contentious
trade partner, China. Many of the views and opinions regarding the deficit have a partisan bias
aimed at current and former presidential administrations (Mantzopoulos & Shen, 2019). Some
economists believe the trade deficit is not as detrimental as the current administration has
communicated citing the potential damage to foreign relations and GDP. Others believe the
enforcement of tariffs and tough trade agreements is necessary to protect American jobs and
domestic production. These economists also point to the actions of foreign countries such as
China that are perceived as manipulative and unfair (Mantzopoulos & Shen, 2019).
Deficit as a Necessity
Dave (2019) argues that the current policies regarding large trade deficits with large
trading partners are not effective in reducing the deficit and potentially have larger implications
affecting domestic labor and production. He suggests there exist underlying factors fueling
current policies including fear of foreign advanced technology growth. From this viewpoint, a
sizable trade deficit is not only acceptable but also unavoidable due to the difference in
production capabilities and cost efficiency in other large nations (Dave, 2019). Chow, McGuire,
and Sheldon (2017) agree with the conclusions set here and goes further to investigate claims of
currency manipulation by China. They conclude that the deficit is not a product of currency
manipulation and the deficit overall is not concerning because the US is far more efficient at
providing service-based products versus the production of goods from other countries. The large
tariffs imposed on imports from China creates large challenges for American companies that
Comp 3/Module 6 - Reflection
University of Phoenix
ECOCB/535: The Digital Economy
, 2
Comp 3/Module 6 – Reflection
The United States continues to have a large trade deficit with most of its largest trade
partners. There is much dispute regarding the perception, necessity and even validity of the trade
deficit. This is especially true when considering the United States’ largest and most contentious
trade partner, China. Many of the views and opinions regarding the deficit have a partisan bias
aimed at current and former presidential administrations (Mantzopoulos & Shen, 2019). Some
economists believe the trade deficit is not as detrimental as the current administration has
communicated citing the potential damage to foreign relations and GDP. Others believe the
enforcement of tariffs and tough trade agreements is necessary to protect American jobs and
domestic production. These economists also point to the actions of foreign countries such as
China that are perceived as manipulative and unfair (Mantzopoulos & Shen, 2019).
Deficit as a Necessity
Dave (2019) argues that the current policies regarding large trade deficits with large
trading partners are not effective in reducing the deficit and potentially have larger implications
affecting domestic labor and production. He suggests there exist underlying factors fueling
current policies including fear of foreign advanced technology growth. From this viewpoint, a
sizable trade deficit is not only acceptable but also unavoidable due to the difference in
production capabilities and cost efficiency in other large nations (Dave, 2019). Chow, McGuire,
and Sheldon (2017) agree with the conclusions set here and goes further to investigate claims of
currency manipulation by China. They conclude that the deficit is not a product of currency
manipulation and the deficit overall is not concerning because the US is far more efficient at
providing service-based products versus the production of goods from other countries. The large
tariffs imposed on imports from China creates large challenges for American companies that
