Trade with EU and Japan is good for the US and Trade with China is bad?

Yesterday in class, we’ve discussed how differently people see the impact of international trade. Here is one more example showing the controversy of the topic: according to a survey conducted by PewResearch in late 2010, 58% of sampled Americans said more trade with European nations would be good for the United States, 60% said increased trade with Japan would be good for the U.S. but only 45% favored increased trade with China. However, statistical data shows that US exports to China outpaced nearly all of the top ten export markets (including Japan and EU) from 2003 to 2012(source: USCBC).  

Why would the general public favor a particular trading partner but disfavor another? Should they? By which standard the general public may assume more trade with a particular trading partner would be good or bad for the United States? In your view, is trade beneficial for the US overall? Can we use any trade theories learnt from the class to explain the above phenomenon? Look forward to hearing your thoughts!

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Author: Sheng Lu

Professor @ University of Delaware

3 thoughts on “Trade with EU and Japan is good for the US and Trade with China is bad?”

  1. I can kind of understand why the general public might favor a particular trading partner over another, but I think it is ironic that only 45% favored an increased trade with China when the statistical data clearly shows over the years our exports to China outpaced all other countries, besides Brazil. I feel as though trade is good for the U.S. as long as it does not get taken out of hand. I can understand why people are concerned with jobs being lost in America but at the same time if we have a disadvantage to another country in producing a certain product, I don’t see why we wouldn’t allow the other country to produce it.
    Basically, my thought process parallels that of the comparative advantage theory. Even if we have absolute advantage over a country in producing two products, we should produce the one we are better at producing then export it, and let the other country produce the second product and then import it. That way we are producing the product in which we have the greatest absolute advantage (in other terms – the one we are “better” at producing), but at the same time we are not totally excluding the idea of trade.
    In the long-term, I don’t think it would be beneficial to our country to think from the view point of the Mercantilism trade theory. If we completely wipe trade out, what happens when someday we actually can’t produce a certain product that is needed? As mentioned in class, the world is not black and white and therefore we cannot predict whether we 100% will or 100% won’t need trade years down the road. Making things in our own country is favorable, but I also don’t think trade/imports should be thought of in a negative manner either.

    1. Excellent comment! I am particularly glad to see you start to apply the theories we’ve learnt in the classroom into thinking the real world debate. Why many Americans don’t like expansion of trade with China although they benefit from it? Very simple, because it is a common perception that products made in China are “cheaper” than those made in USA, therefore imports from China are regarded as a threat to the US-domestic manufacturing and cause job loss here. Actually the general public in the US is worried about trade with any developing countries with low wage level (such as Vietnam, India, even Mexico). It takes time to educate the public as well as the legislators (senators and congressmen) and help them realize that: 1) trade is not just about merchandise, but also about service; 2) trade benefit consumers; 3) following the concept of “comparative advantage” will generate more welfare for the US economy as well as the world economy. On the other hand, the calls from import competing industries do need to be well taken care of, because they are politically influential. With that, I hope our students can realize things associated with our textile & apparel industry are complicated and critical. When we get dressed each day, we wear more than just clothing, but also the global economy and the politics.

  2. International trade is definitely beneficial to the US. It allows us to obtain resources that would otherwise not be available to us. It also gives us the opportunity for US companies to source outside of the US, and therefore produce and sell merchandise cheaply and efficiently. I do not understand why Americans would favor trade with European countries over trade with China. In my opinion, trade with China is more beneficial to the US than trade with European countries. China is home to many factories with cheap labor that can cheaply produce a vast range of products. Trading with China gives the US the opportunity to import large quantities of low cost products. To US consumers, low prices are the most important factor when buying merchandise.

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