One argument for curtailing imports to the U.S. could be that, if there is a larger demand for import than vis versa, domestic jobs could be lost to foreign countries. Nowadays it is a common opinion that U.S. manufacturing jobs have moved to competing importing companies. On a closer look, one can observe that trade also creates employment ( Delivering / Processing / Operating Crews, for example).
Additionally, the American labor force is generally highly skilled, cutting imports would mean that those imports would need to be produced in the U.S., resulting in a prize increase and inflation. A very good example for the increase in prize – as discussed in class- would be Apple’s IPhone which price would possibly ten fold when produced in the U.S. and not China.
In conclusion one can say that when the U.S. imports inputs for a significant less amount that it would cost to produce those inputs domestically, the final product can be purchased for a lower price.
The nation’s currency value is another argument. As U.S. companies purchase goods from foreign countries, they have to exchange foreign currencies into dollars to cover their cost. By exchanging large amounts of foreign currency, they are increasing the price of the dollar. Given America’s large trade deficit, the value of the dollar should be low. A reason for why it is not, is America’s position in the world. Not only is America the largest economy but it’s currency is also the world’s reserve currency.
A consistent trade deficit can have devastating consequences for a country’s economy, including employment and fall of currency value. Yet the U.S., holding a unique position in this world has proven this argument wrong. Further, cutting imports would increase prices of products and increase inflation.