U.S. ECONOMY & WORLD TRADE CH 17, section 17.2

U.S. Imports Consumer goods Oil and petroleum products Motor vehicles Electronic products

U.S. Imports—Consumer Goods Includes things like clothing, shoes, small appliances and. home furnishings. Consumer goods accounted for the largest amount of import spending in Four years later it stands in 3 rd place, behind industrial and capital goods. Why do you think there were fewer consumer good imports in the last 4 years?

U.S. Imports—Oil and Petroleum Products Since the explosive growth in energy prices, this has become a large part of why industrial supplies are now the leading import for the U.S., accounting for over half of all imported goods in 2011.

U.S. Imports—Motor Vehicles Vehicles are a close second to oil and petroleum for U.S. imports, most of them coming from places like Canada and Mexico. Often times cars are assembled in a foreign country, even if they are a U.S. owned company, which makes them imports. Did you know that some vehicles from “all American” companies like Ford and General Motors are actually imports?

U.S. Imports—Electronic Products Usually included in the capital goods section of imports. Includes things like computers, tvs, cameras, smartphones. How different would your life be if you couldn’t buy these products?

Includes categories like: motor vehicles and parts, electronic products, airplanes and airplane parts, agricultural products. U.S. Exports

U.S. Exports—Motor Vehicles & Parts Mostly large equipment like tractors or heavy duty trucks. The 2 biggest U.S. exporters in this area? John Deere and Caterpillar.

U.S. Exports—Electronic Products Includes computer and telecommunica tions equipment.

U.S. Exports—Airplanes & Airplane Parts The U.S. is the world leader in this category, with Boeing being the single largest exporter in the market.

U.S. Exports—Agricultural Products Includes things like grains, meat, and orange products. The U.S. is considered to have a comparative advantage in this type of production.

More than 30% of all exports are SERVICES! The U.S. has more service based companies than it does manufacturing companies. Exports include things like: travel and tourism, transportation, financial and insurance services, entertainment, and legal services. Trading Services

The Trade Debate  By using resources efficiently, consumers have more products/services available.  Greater demand means more jobs  More jobs mean more income, which means more spending overall  Additionally competition from around the world forces companies to produce high quality at lower prices.  As the U.S. moves toward a service economy, service positions are created but manufacturing jobs are lost.  This may require additional training for someone who was working in a manufacturing job, creating a temporary unemployment. International Trade benefits everyone International trade takes jobs away from U.S. workers

The Trade Debate—Foreign Investment Counts! Did you know that Toyota’s investment here in the U.S. through plants and dealerships created more than 100,000 jobs for people right here at home?

This is simply put the price of one currency in terms of another currency. Exchange Rates

Exchange Rate Activity What is the current exchange rate for Chinese Yuan Renminbi to the U.S. dollar? How many Renmimbi could you buy with $500 U.S. dollars? Is this more or less than you would have received in 2008, when $1 = 105 Renminbi? How does this affect the price of Chinese goods to American tourists?

How Exchange Rates Work  The price of a currency will rise and fall with the demand for it (ie. The more people who want that currency, the higher the price). It may help to think of a country’s currency as a product for sale.  This demand will change for a variety of reasons—to complete a business transaction (like purchasing a shipment of cars), higher interest rates available on financial products, investment in a foreign country.  Any of the above scenarios might increase the value of the currency in the country it is being demanded from.  This means it may take more U.S. dollars to “buy” a British pound, for example. (ie. Instead of 1 USD = 1 British Pound, it might be 1.25 USD = 1 British Pound)

Impact of Exchange Rates A small increase in the value of a currency can cause an import to cost thousands of dollars more, illustrating the significant impact exchange rates have on world trade.