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Bobbe Jurado
Kaplan University
BU224-01
Unit 2 Assignment
When searching through my closet I picked out ten items that I wear the most. Looking at
those ten items I was able to find one item that was manufactured in America. The other nine
items were manufactured in China. Before today I did not realize how many things I own were
manufactured outside of America. When purchasing items I do not take into consideration where
they are manufactured. I focus on the need of the item, durability and price. International trade
allows me and others the ability to have a wider selection of the items we want. International
trade allows more resources at competitive prices for consumers that otherwise would not be
available.
When a country doesn’t have the resources or ability to produce what they need, they
trade with other countries. Trading allows countries to fulfill their needs and wants. When a
country can supply goods cheaper than other countries that country has an absolute advantage
over other countries. Trading with a country that has the absolute advantage will allow the
purchasing country to save money and resources. Providing a wider selection of goods and
services can result in consumers purchasing more and contributing to economic growth.
According to the US Trade Representative the United States is the world's largest
economy and the largest exporter and importer of goods and services. There are advantages and
disadvantages of trade to both trading countries. Trade in America allows a larger variety of
goods for people to choose from. Without trade Americans could only purchase items made in
America. Importing creates jobs for many people and increases disposable income. The increase
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in disposable income contributes to economic growth because people are spending more money.
Trading also provides affordable prices for consumers. If goods were not affordable through
trade it would not be beneficial to trade. Importing is used as a competition tactic to drive prices
down.
Americans are also negatively impacted by importing goods and services into the U.S.
markets. Importing goods affect local business that supply the same good. Importing competes
with the local business and if the local businesses cannot match the prices of the imports it forces
local business to close. The closing of local businesses puts workers out of jobs and increases the
unemployment rate. When this happens there is less disposable income and spending goes down.
Decline in spending is a negative impact on the global economy. There has to be a balance of
imports and exports to prevent contributing to the deficit. The advantages have to outweigh the
With trade comes the opportunity for an imposed tariff. A tariff is a tax on imported
goods. The goal of a tariff is to control trade, decrease imports and increase local purchasing.
There are advantages and disadvantages of imposing an import tariff. Decreasing imports
increases opportunities for local companies by reducing competition. When consumers purchase
products locally, they pay less for the product in most cases. Manufacturers and workers of the
local companies benefit from the local purchases through increased income. The government
collects the tax and can use the additional money towards the deficit.
The disadvantages effect the workers and the consumers. A tariff increases the price of
the product being imported resulting in the consumer paying more. Decreasing imports lowers
the competition of a product. When competition is low the quality of the product can suffer
because there is no incentive to increase the quality. Reducing trade results in decreased
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production of products that lead to increased unemployment. Job loss results in less spending and
that negatively impacts the economic growth. Retaliation can also occur as a result of a tariff. In
retaliation the other country will increase the cost of exports. This increase will result in loss of
income for the importing country, contributing to unemployment. The disadvantages outweigh
In January 1994, the United States, Mexico, and Canada implemented the North
American Free Trade Agreement (NAFTA). The goal of NAFTA was to improve the current
trading procedures. Reducing tariffs, removing boundaries on investments and improving the
protection of copyright and patents were part of this agreement (Amadeo, 2017). Trade
agreements have advantages and disadvantages as well as tariffs. The advantages of NAFTA was
the increase in trade. The increase in trade created jobs and improved the economic growth in the
United States. When trade increases it raises the competition of goods. When there is more
competition the price of products is driven down. This saves consumers money and reduces the
relocating to Mexico because of the cheaper wages. The companies could save money by hiring
cheaper labor in Mexico. Relocating companies to Mexico resulted in workers losing their jobs
and suppressing wages in the U.S. (Amadeo, 2017). This agreement allowed for subsidized farm
products to be brought into Mexico. The farm products that were imported was cheaper than
what Mexico could produce. Eventually farmers were forced out of business and many lost their
farms.
Another trade agreement that The United States was involved in was the Free Trade of the
Americans Agreement (FTAA). This agreement included the Caribbean, North, Central, and
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South America. After 10 years of work on this agreement it was abandoned. If the FTAA had
been implemented it would have “enabled prosperity through increased economic integration and
free trade (where barriers to trade in goods and services and investment are progressively
eliminated) among the countries of the Western Hemisphere with a view to raising standards of
living” (Bardouille, N.C., 2002). The U.S. could have benefited from this agreement in several
ways.
The U.S. would have had a competitive advantage in this agreement. The poorer
countries would have access to richer countries. This access would help in fighting poverty of
those countries. The agreement would open up more trading and increase imports. Increasing
imports is good for economic growth. This agreement would increase competition and lower
The problems with the FTAA is that America would have had an unfair competitive
advantage against the other countries. America is able to produce food at a much cheaper price
than the other countries. The other countries would not be able to compete with America and
would suffer job loss. The government would have negatively been impacted by organizations if
the agreement had been implemented. Organizations would have had the opportunity to be
treated at legal entities. “The organizations would have been able to sue the government for loss
The TAFTA between the U.S. and the EU is the world’s largest free trade area. The
purpose of this agreement was to increase trade and eliminate tariffs. The agreement also set
standards that companies have to adhere to. Eliminating tariffs allows consumers to purchase
goods and services at a lower price. Increasing trade creates new businesses and jobs for both
countries. The agreement increases trade opportunities that both countries can benefit from.
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All agreements have negative effects and the TAFTA has a few of its own. With
companies having the ability to sue the government legal issues can increase. Europe can suffer
because of the new standards of companies. If the new standards are not as severe as before it
can cause more severe issues. With the increase in trade some areas are not able to compete with
the lower prices and those areas will result in job loss.
The Trans-Pacific Partnership (TPP) i.e. the U.S. trade across the Pacific Ocean “is
dedicated to expanding economic opportunity for American workers, farmers, ranchers, and
businesses” (US Trade Representative 2015). The TPP is one of the most ambitious free trade
agreements ever attempted. The goals of the TPP is to promote trade, create jobs, and increase
economic growth and investments. This agreement could create more jobs resulting in more
Increased wages as a result of this agreement is not an advantage to most workers. “The
increase of wages would primarily go to workers making more $88, 000 a year” (Amadeo,
2017). Another down side to TPP is the protection of patents and copyrights. The protection
reduces the availability of medications. When there is a reduction in supply the cost goes up.
As companies expand internationally the need for adapting to other cultures is imperative
to success. Companies sell their products and services into foreign markets to increase their
profitability. Marketing the business is dependent on understanding the culture it is in. In order
for companies to sell their products they must hire workers to produce the products.
Understanding cultural differences of employees helps the organization hire, train and manage
the employees. Laws and customs must be obeyed in every country. Violating the laws could
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have substantial monetary consequences for the business. Accepting cultural difference allows
educating themselves. There are many resources available to research other cultures.
Researching other cultures will increase the understanding of opinions and habits of other
cultures. Accepting the difference increases the network of groups and communities and
promotes relationships. Understanding and accepting cultural differences allows America to have
References
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Amadeo, K. (2016). FTAA: Agreement, members, pros and cons. The Balance. Retrieved from
https://www.thebalance.com/ftaa-agreement-member-countries-pros-and-cons-3305577
Amadeo, K. (2017). Do NAFTA’s 6 pros outweigh its 6 cons. The Balance. Retrieved from
https://www.thebalance.com/nafta-pros-and-cons-3970481
Amadeo, K. (2017). Trans-Pacific Partnership summary, pros and cons. The Balance. Retrieved from
https://www.thebalance.com/what-is-the-trans-pacific-partnership-330558.
http://search.ebscohost.com.lib.kaplan.edu/login.aspx?direct=true&db=bth&AN=27647546&site
=eds-live
Froman, M. (2015). US Trade Representative 2015. 2015 Special 301 Report. Retrieved from
https://ustr.gov/about-us/policy-offices/press-office/reports-and-publications/2015/2015-special-
301-report
trade
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