Essay: How Trade Deficits can be Dealt

Sample Essay

Trade deficits can be dealt with easily if the budget deficits are corrected. One of the basic approaches is by use of politics of a country (Phillips 37). Politicians do actually play a major role in policy formulation. Fiscal austerity policy is the only known way to correct budget deficits. It is the politicians who draft such austerity policies thus the can easily make them in way that they directly correct budget deficit and indirectly reduce trade deficits. This approach can be used to deal with both the problems simultaneously.

Another way of dealing with the problem of trade deficit is through trade protectionism. A country formulates rules that are only favorable to its exports and less profitable to its competitors. By so doing, this measure reduces imports. However, it also result into added spending demands  for industries that are import competing crowding other types of production which can bring about inflation (Diego 23).

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