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US China Trade Deficit: What if China suddenly disappeared?

June 21, 2018 by Tech Recode

Importance of China to the US Economy

China is the second largest overseas market for US companies, worth more than $400 billion, after Canada which is worth more than $800 billion. The U.S. trade deficit with China was $375 billion in 2017 because U.S. exports to China were $130 billion while imports from China were $506 billion.

Causes and Affects of U.S. China Trade Deficit
American consumers want to buy goods for the lowest prices. For this reason, U.S. companies produce many consumer goods in China for lower costs. This is possible because wages in China are lower because of a lower standard of living. If U.S. avoids trade with China, this would force American consumers to pay higher prices for "Made in America" goods. Due to this, it's unlikely that the US trade deficit with China will change. Moreover, if U.S. would implement any trade protecting policy, then that would hurt U.S. to pay higher interest on debt since China is the largest lender to U.S. government.

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