International Trade Myths
Duty Drawback Software | Import Export Consulting | Processing Filing | Full Service
International trade has many economic benefits. Free trade allows consumers to buy more, better-quality products at significantly lower costs. With free trade we get economic growth, enhanced efficiency, and increased innovation. These are some of the realities that come with international free trade. What we need to be warry of are the myths that are often associated with international trade.
First, more exports do not necessarily mean more wealth. It is actually the total level of trade that reflects economic wealth. This means total imports and total exports. More exports increase wealth only because they allow us to buy more imports and give non-Americans greater incentives to invest into the economy. If we only export and restrict imports it leaves our economy worse off.
Secondly, many think that free trade means domestic jobs go overseas. False. What really happens depends on the industry. For example, with free trade jobs in highly inefficient industries might be reduced. On the flip side, it frees up resources to create jobs in highly efficient industries, boosting overall wages and improving living standards. Protectionism might “save” some jobs but that comes with a cost. The cost of opportunities and input costs will swell for industries downstream.
Lastly, this sounds counterintuitive but trade deficits are good for us. This is because a trade deficit is usually a signal that global investors are confident in our economic future. Our trade deficit might be larger than it would otherwise be if a trading partner chooses to keep the price of its currency artificially low, but this practice harms the trading partner, not us.
While international trade can have some downsides, overall, there are so many benefits and we have to weed out the misconceptions that are often discussed with this topic. Bust these myths and know the benefits of international trade!
Gas Prices Up & Down
Duty Drawback Software | Import Export Consulting | Processing Filing | Full Service
During the past two years, we have seen gas prices skyrocket. The cost of gas spiked significantly, reaching highs that this country has never seen before. But if you have been paying attention, these past 3 months have been different. According to NBC News, for 98 consecutive days this summer, American drivers experienced declining gas prices thanks in part to a slower worldwide demand for oil. Unfortunately, we are beginning to see prices go back up.
In late September a cut in oil production signaled by the OPEC+ group sent global crude prices higher, pushing prices back up at the pump here in the United States. Major oil producing countries including Saudi Arabia and Russia announced that they are cutting oil production by 2 million barrels per day. According to AAA, the national average for a gallon of gas climbed to $3.92 on October 10th.
Many parts of the United States will see slight increases but Californians and regions surrounding the Great Lakes are in for some super high prices. Patrick De Haan, Head of Petroleum Analysis at GasBuddy says that for the past few weeks, an onslaught of refinery issues both in the west coast and the Great Lakes is the reason why gas prices have tremendously increased. De Haan says refinery issues include undergoing seasonal maintenance along with minor issues that, when put together, greatly limits the ability for refineries to produce gas. It is the combination of planned maintenance, but more so the unexpected outage that have caused prices to soar in some regions. De Haan said that he expects prices to rise as much as $0.30 from their September lows, which would put them at around $4.00 a gallon as an average across the country.
The summer months were good for us as gas prices finally started to come down from the COVID-19 pandemic but unfortunately we are going to see prices surge again until at least the end of the year.
