Introduction Globally, the mid 2000 experienced an economic performance boom. Things then turned for the worst after the financial crisis that happened in August 2007. During the boom period, the aggregate growth of the economy was robust; the rate of inflation was low; the international trade, in reference to the flows of finance, expanded; the countries that in a development and emergence stage experienced a tremendous rate of progress and an evident crises absence (Willem & Hanjiang 400). However, three trends, which were increasingly unsustainable with the passage of time, resulted to the underpinning of the strong performance of the global economy. The first trend involved the real estate values. As such, in many countries, they were rising with an incredible high rate. This indeed included the larges economy in the world, that is, United States. The second trend was; in several countries including the United States, the deficit in their current accounts were not only rising but also running high at the same time (Willem & Hanjiang 402). Thirdly, in many economic sectors across the world, there was an extra ordinary build up of leverage. The most notable major leverage build up was among the consumers in; financial institutions across the world, the United States and in the Great Britain. According some financial analysts, the global trade imbalances indeed was not the cause of bubbles related to housing neither was it the cause of leverage (Willem, & Hanjiang 405). In fact, the condition was important in a critical way as a codetermining. Beside the U.S being the largest economy in the world, it hosted the highest rate of privatised ownership of homes as compared to all other countries in the world (Willem & Hanjiang 410). Thesis Statement This research paper will aim at assessing the issue of global trade imbalances in regard to; World policy Makers Reaction, Global trade imbalances threatening the free trade, the question of what is trade imbalance, if it is possible that Global trade imbalances be sustained and what measures could be taken to reduce the global trade imbalances. Discussion Even today, the interconnection between financial meltdown in the world and the global trade imbalances still remain to be a great controversy. Some research papers argue that external trade imbalances indeed do not have a significant contribution to world crisis. In addition, they claim that the crises are caused by the failures of trade regulatory as well as errors in trade policies. On the other hand, others believe that it is the mechanisms incorporated in the world trade that play a role, which can be said to be primary in nature, in causing the financial collapse (Morris & Nicholas 106). For instance, the U.S Treasury Secretary indicated that the tremendous savings by the Chinese, the countries exporting oil as well as other countries with surplus are the causes of the depressed world real rates of interest, which in turn result to investors, make scrambled efforts towards attainment of yield as well as the risk of under price (Morris & Nicholas 109). World policy Makers Reaction to Growing Imbalances In the period between late 1980s and late 1990s, the deficit account of the U.S fluctuated such that it went to extreme of below two percent of the gross domestic product. In the year 1998, Asia experienc