Anonymous
Anonymous asked in Social ScienceEconomics · 9 years ago

What would be the effects of a law requiring bilateral trade balances?

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  • 9 years ago
    Favorite Answer

    Besides the trade war mentioned in the other answer, the economy would tank.

    Japan, Taiwan, Korea, etc. have no domestic oil supplies. They sell goods to the world and use the proceeds to buy oil from the Middle East. Since we can't sell them oil, their exports of things we need, like electronics and computers would drop. Setting up a domestic electronics and computer industry is very expensive so the prices of these essentials to the modern economy suddenly become far more expensive.

    Or consider Mexico, Canada, and Saudi Arabia. We import most of our oil from them. If they don't want to buy more U.S. goods, are we really going to stop buying their oil? If we did, what would that do to our economy?

    Then there are countries such as Australia, the Netherlands, and Singapore. They already buy more U.S. goods than they sell to the U.S. Are you going to force Americans to buy more from these countries or are you going to force these countries to buy less from the U.S.?

    http://www.nationmaster.com/graph/eco_tra_bal_wit_...

    BTW, what would really happen is that someplace like Canada will act as a broker. Most imports and exports, to and from the U.S. will go through there.

    That will just add transportation and handling costs, making the U.S. economy and all our other trading partners poorer and the Canadian economy slightly richer.

    Go for it.

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  • Dave B
    Lv 6
    9 years ago

    Trade war.

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