UK Custom Essay Sample on «International Trade and Finance»

International Trade and Finance

In cases whereby there is an excess of imports brought into the United States, the price of the products usually goes down, irrespective of the origin of the product. This comes to a point whereby the products are in excess and, thus, are sold at a loss. Excess imported products implicates that the US government is conducting more imports than exports. This is a situation that results to trade deficit in international trade and relations. This is the reason as to why all countries have tariffs for controlling trade deficits. For instance, in the sales of cars, if even the seller decides to cut 8,000 dollars of the car’s price, which originally costs 38,000 dollars, such a change leads to a loss, not forgetting that the seller has paid for other services such as storage. This negatively affects trade due to the fact that they have to pay revenue for the car that has not been sold yet; this product’s environmental wear also reduces the chances of finding a potential buyer. A surplus of imports leads to a completion between the domestic providers and those who import goods; in this case, those who import are likely to lose profits as domestic providers have less revenues to take care of, unlike the importers. Consumers, on the other hand, are forced to use the services of the cheaper providers without looking at the quality of the products.

International trade has effects on GDP, domestic markets and university students. Gross Domestic Product entails the the value of all the products produced by a nation in a specified period. GDP and employment usually go together; thus, as employment rates reduce in the United States, this leads to a reduced GDP. GDP comprises consumption, government expenditure, and government investment. However, when a state is open to international trade, its GDP gets affected through the exports in comparison to the imports. A country is safe economically when it conducts more exportation activities than imports. Importation of goods implicates lower prices for products, hence making it difficult for the US organizations to compete alongside the imported goods that are lower in prices. Therefore, international trade negatively influences the US domestic market. International trade has affected domestic trade and university students because the imports and exports that are controlled by the government are of aid to the economy in aspects such as the university students’ loans, what the country needs from other foreign countries and, finally, what the United States should produce at home. International trade has led to globalization. Globalization has affected university students as the educational philosophies and practices have changed in the US.

International trade is largely affected by the choices that are made by the government in regards to tariffs and quotas. Tariffs and quotas are basically taxation on imports. The US government receives revenue from these tariffs and quotas; therefore, they play a vital role in international relations. The choices made by the government on tariffs and quotas usually protect the domestic market from being dumped by international trade and other governments. The government had the capability of controlling international trade with foreign countries via increasing or decreasing of tariffs. Consequently, when the government sets tariffs, some foreign countries find it hard to conduct trading due to high tariffs that they are unable to meet. Therefore, it is economically helpful for the federal government to control tariffs and quotas to enable international trade that will not suppress their domestic market.

Foreign tariffs negatively affect the country as it tends to raise the prices at its domestic market; this, in turn, forces domestic suppliers to set lower prices in international markets. Quotas basically restrict the supply of products to a definite amount, which increases the costs past the market level and, therefore, reduces the demand for products. Quotas are numerical limits imposed on imported goods. The government of the United States selects tariffs and quotas in a manner that meets international relations and trade standards. The governments of China and the United States usually have good international relationship regarding the issue of products that are imported. However, it is vital to note that China is extra favorable with tariffs and quota and this is their main reason for their economic growth. A government that has lower tariffs ensures that more imported products from foreign countries are being exported to the United States.

The foreign exchange market entails a financial setting whereby foreign currencies, namely the pound, yen, dollar and euro, are usually traded for a local currency. Foreign exchange rates refer to the rate whereby one currency can be changed into a different one. Most countries opt for the system of self-sufficiency; they try to provide their people completely with the products and services that are available in their mother country; this system is referred to as a closed economy. Foreign exchange rates are basically determined by the supply and demand. Much demand for a precise currency leads to a rise in its price. In cases whereby a currency increases its value, its price is usually controlled. Therefore, foreign exchange rates are determined by two factors: the country, since the federal government states the exchange rate and controls the exchange of their currency, and the market, which allows the demand and supply market of particular currencies to work effectively and be at an equal level with international exchange rates.

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The United States imports a lot of products from foreign countries; the import and export of these goods and services play a significant role in the steadiness of US financial growth. China is one of the countries the US intensively deals with. If the United States has excess import rates, this means that there is a rise in the trade deficit. Trade deficits are not healthy for any economy due to the fact that they reduce employment rates. A good example of products imported in surplus by the US are auto-parts from China. This poses the US auto-parts sectors at the risk of cutting the number of their workers as a result of a high availability of parts imported from China. The government of China promotes trade of auto-parts to the US in an unfair manner. All the companies related to the auto-parts business in the US are at jeopardy. However, the US government cannot stop importation of goods form China or any other country. One of the main reasons as to why the United States government can not restrict all goods coming in from China is due to the fact that, in case the US puts a restriction on Chinese products, then China will also restrict imports from the United States and, thus, their market will not have access to one of the fastest intentionally growing markets. Therefore, the United States government cannot minimize the flow of products from other countries as it will be denying itself a chance to develop as other countries will also cut their trade with the US.


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