But as the situation progresses, tensions between America and her trading partners are bound to flare. The U.S. and Japan have come close to an all-out trade war twice in the 1990s over everything from rice to luxury cars and consumer electronics. With oil prices skyrocketing and U.S. oil imports on the rise, tensions with OPEC could surface, especially if Saddam Hussein decides to cut production. Finally, Communist Red China considers the U.S. its number one enemy. We have a lot of disagreements with them over issues like Chinese proliferation of ballistic missiles and weapons of mass destruction and their expansionist aims with regard to Taiwan and the rest of the Pacific Rim.
Some observers claim that the trade deficit is a benign deficit with no real negative effects.
U.S. companies have to match the import competition, but will do so at a cost . Profits have to be shaved to compete with cheaper foreign goods. Lower profits have an effect on the stock market , because investors don't like low earnings. Meanwhile, with rising oil prices and our growing dependence on foreign oil, the trade picture could get even worse-perhaps much worse. A strong dollar makes U.S. goods more expensive overseas and foreign goods cheaper here.