Kate Canino. (2011). How Trade Deficits work. New York. Rosen Publishing.

Some notes…

(p.28). A (trade) deficit, in fact, reflects US strength since Americans can buy more products than the countries they do business with.

The North American Free Trade Agreement (1994) between the US, Canada and Mexico, according to Canino created nearly 40 million jobs in the US.

However, for the Mexican farmers, millions became unemployed as US farms (e.g. corn and beef) put them in the red. (p. 44). There has been an influx of immigrants, significant portion illegal, into the US. (That is why current US presidential hopeful, Donald Trump, wants to a build a wall to lock out the Mexicans).

Now let us put this in place with (p. 16). Walmart, the retailer, who takes in 600,000 fresh workers per year. Yet the turnover is 44% (near the retail sector average!) It has 1.2 million employees globally.  It has 35 Walmart Supercenters in China. (At the time of this post, Walmart has 337 Supercenters there). In addition, it has a domestic customer flow of 400 million each month; standing for 8% of internal retail sales excluding automobiles. It gives different hourly pay in regions. It is $11.20 in Austin, Texas while in other metropolitan areas (population 50 thousand or more) the average is $10.38.

Now to trade relations with China. Is there a valid fear of reliance on low cost Chinese imports?

  • US-China trade volume = 2.4 billion (1979)
  • From 1985, China’s exports to the US experienced annual increase
  • China entered the World Trade Organisation (2001)
  • Trade volume was 211.6 billion (2005) and China is the largest business partner/export destination
  • Main Chinese exports to the US are office/telecommunications equipment (p.46)

For Canadians, this is bad news. The US demand for goods has shifted to Chinese imports. This is compounded by the weaker US Dollar resulting in further reduced US purchases. (Economist Douglas Porter of BMO Capital Markets, stated that Canada had in the past decades enjoyed ‘ravenous U.S. demand’).

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