International Trade Flow Has Affected The Account Balance

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In the past couple decades, the United States’ international trade flow has affected the account balance greatly. Since the ongoing trade deficit has resulted in a constant current account deficit. Earnings on United States’ investment and assets owned in the international market is a very small part in the account system, and the surplus in this category is not big enough to balance out the huge trade deficit. In the broad spectrum, the account deficit indicates that the value of the goods and services bought outside the United States’ territory goes beyond the value of goods and services being sold to foreign parties. The United States current account deficit has been getting bigger since 1990s and reached a new record and global high of…show more content…
Just 9 developed countries set about 80% of the FDI in the United States. Japan, Netherlands, and United Kingdom are the top sources of FDI in the United States. While the manufacturing in United States draws about 40% of FDI. United States’ Trade Structure United States is the 2nd leading exporting country in the world of goods and services while it is the country that imports the most. The United States consistently imports more than it exports, primarily due to it depending on oil imports to meet its demand for consumer goods outside of U.S. and to meet its energy requirements. The United States recorded a $702 billion in deficit from just petroleum products in 2013. Meanwhile, the United States only had $231 billion in surplus from service trade. Few of the main trading partners of the United States are China, Mexico, Japan, and Canada. While Canada is the main country to which United States exports to, where as China is the main import source. In 2013, the trade deficit that was hit with China hit a new high at $318 billion. The United States is generally looked up to as a proponent of free trade agreements and lower trade barriers and thus is regarded as playing a major role in foreign trade system. The United States currently has more than a dozen free trade agreements in place. In which the NAFTA, the North American Free Trade Agreement, was created by a compromise between Mexico and Canada during
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