During the period of 1990 to 2000, our Presidents saw that open trade policies were truly an important element in maintaining productivity. In 1993, President Clinton was very aggressive in the globalization of trade. During his tenure, there were more than 300 trade agreements with specific countries and international groups. International trade is an area where knowledge will challenge your views and ideas regarding the negative impact of global trade on the American economy and the loss of manufacturing jobs. I was totally against The North Atlantic Free Trade Agreement (NAFTA) and its negative impact on the automobile industry. However, researching economic data on this subject has changed my view on this issue. What company would not transfer their manufacturing facilities to a country (Mexico) whose hourly wage ranges from $1.45 to $5.50 versus U.S. hourly wages of $17.86 to $23.83? Additionally, there are extremely low to no tariffs when importing the cars into the United States. Transportation costs are extremely low; therefore, the owners of the companies get to retain significant profits. The good news…open multilateral trade had great success in the 1990s. The ratio of U.S. trade to GDP rose from 17.2% in 1985 to 23.6% in 1995. Manufacturing exports in 1995 were …show more content…
Many of the U.S. trade agreements give trade partners “most favorite nation” status, no tariffs, or extremely low tariffs. U. S. policies and laws also allow American global companies to count their sales in other countries to avoid taxes. Per Bailey and Looney (2017), “…an iPhone is assembled in China for $250 and sells in Europe and the U.S. for $750. Apple’s profit is $500. Often that economic value gets attributed to an Apple subsidiary set up in a low-tax nation like Ireland or Luxembourg”. This is only one example that the American trade deficit is