Why has the U.S. had a trade deficit almost every year since the early 1970's?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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There are lots of reasons for this.  I would say that the most important one is simply that the United States is a very rich country and rich countries tend to import a lot of goods.

The United States is one of the richest countries in the world.  Because of this, people in the US demand high wages for their jobs.  They are not willing or able to work for low wages.  This means that other countries can outcompete US workers in low-skilled jobs.  It makes much more sense for a TV company to build TVs in a place where the workers don't get paid much than to build them here in the US.

The fact that the US is rich also means that we are able to buy lots of stuff.  Simply put, when you have a lot of money, you can afford to buy a lot of stuff from the low-wage countries.

So the major reason we have a trade deficit is that our wealth makes us A) able to buy a lot and B) a bad place to have manufacturing so the things we buy need to be made overseas.

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