Why the United States Can’t Escape Trade Deficit

in Economicsyesterday

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Do you know that for a good number of years the United States trade balance has always been on the negative side which means that for all these years the United States has always imported more goods than they exported.

Despite being the largest and most productive economy on earth one might wonder why the United States allowed this to happen
but overall it's a deliberate attempt by the United

States let me explain.

When the United States Backed out from the gold standard making the dollar unstable they decided to look for another backup which led them to strike a secret deal with Saudi Arabia and other rich Arab countries for them to sell Oil in no other currency than the United States dollars in exchange for Economy Security and United military protection. This was known as the petrol dollar deal.

But in order for the United States to maintain dollar liquidity globally it has to import from countries and pay them In US dollars because for the petrol dollar deal to work the United States has To ensure liquidity by buying more goods(sending the US dollars out) to ensure circulation making it easier for countries to access use to buy oil.

If the United States decides to operate in a trade surplus which means they will export more than they import and in this process countries would pay them dollars and this would cause scarcity of Dollars and countries might start looking for other alternatives.