What Happens When There Is a Surplus of Imports Brought Into the Us

Topics: International trade, Free trade, Export Pages: 3 (1056 words) Published: July 14, 2013
International Trade and Finance Speech
What happens when there is a surplus of imports into the U S: A surplus of imports is good for consumers but bad for local business. We have to produce and manufacture in order to export. As our export trade shrinks, so does our workforce and economy. The surplus of imported cars for 2012 has exceeded the exportation by $152 billion. Also the shelf life of cars is 1 year. Every year at the end of the cycle the existing models are sold off at huge discounts to make room for the new models, which is good for the consumer.

What are the effects of international trade to GDP, domestic markets and university students. International trade comprises exports and imports, the net result of which affects our GDP. Since our imports exceed our exports our GDP would be impacted by our net exports or deficits. The rippling effect of financing deficits is an increase in interest rates from selling bonds that reduces investments and growth. This further reduces GDP. Domestic markets flourish when there is a demand for local products overseas. If the domestic markets have to compete with imported products it could be a struggle. However jobs can be created for the advertising, sales, and distribution of foreign imports. The effect of international trade on university students has recently brought about an awareness of a vibrant industry in the education services. Of the $35billion worldwide market for international students, the U S was able to capture a market share of 45%, showing a healthy surplus of $12.6Billion in higher education. A foreign exchange rate is the rate at which one currency would be exchanged for another. It is essentially the value of a currency when compared to another and is determined by two fundamental forces of economics, supply and demand. When the supply of a currency exceeds the demand, the value of the currency falls. However when the demand for a currency exceeds the supply the value rises. When the...
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