Brazil Wants Free Trade

Although the economy of Brazil isn’t the greatest in the world – quite literally – it’s still significant, considering that the nation is so large, but more importantly because it is home to more people than any other country on planet Earth, with the exceptions of China, India, the United States, and Thailand.

According to Eduardo Guardia, the finance chief of the nation of Brazil, the nation is against protectionism, or policies in countries that keep their own goods for themselves, rather than trading them throughout the globalized world at large.

Mr. Guardi said in an interview with CNBC, “Brazil wants to become a more open economy,” which roughly translated, in terms of practicality, that the nation’s financial leaders, including all those within the ranks of Brazil, that the nation wants to import more goods and from outside of its orders, as well as export raw materials, commodities, and other indirect sources of economic activity poured back into Brazil, rather than kept within its own barriers.

Such sharing cam about at the International Money Fund Spring Meetings in 2018, which was held in none other than the great ol’ United States, in its capital city of Washington, D.C.

Despite the fact that the economy of Brazil will certainly reap the benefits of the trade war that’s going on between the United States and China, as both of the countries will go to Brazil for business, the nation is clear about its thinking that free trade is the way to go in terms of economic success.

Trade Secretary Mnuchin Hopes To Resolve Potential Trade War ASAP

If you’re not already sure of what trade deficits are, or are simply always down for a quick refresher of information, an example of a trade deficit is as follows:

If the United States ships out $10 worth of goods to China, and China ships $12 to the U.S., the former country is in a trade deficit of $2, whereas China would have a trade surplus of $2. Neither country owes one another anything – trade deficits simply indicate how much economic output a country is responsible for.

The United States has a huge trade deficit with none other than the world’s most populated country, China, which is one reason why President Donald Trump hit goods coming from the country into the United States with excessive tariffs, collectively covering more than one thousand individual products.

According to Steve Mnuchin, the Secretary of the United States Treasury, he believes that trade tensions could soon resolve between the United States of America, China, and any other countries that currently are owed money in terms of trade deficit.

Such remarks by Mr. Mnuchin come just shortly after meeting with some of the highest-ranking, most popular leaders that have to deal with trade in between countries, all of which hailed from China, Japan, and various countries throughout the world.

According to historical analysis, the current trade war that China and the United States are effectively already entered into is the largest since since World War II, with each imposing trade barriers to the rune of $50 billion each.

Escalating Trade War with China Could Put U.S. Companies at Risk

The brewing trade war between the United States and China is showing no signs of slowing down, putting many U.S. companies at risk. Over the past week, the two countries have seen tensions escalate as more tariffs are announced on each side. As the dust settles, experts believe it will be interesting to see which country has more at stake in the growing conflict. China faces greater challenges in the goods sector, as it ships over $500 billion in products to the U.S. annually, as opposed to only $130 billion in products shipped to China from the U.S. However, although the U.S. would likely win the battle of material products, the Chinese have the upper hand when it comes to travel and hitting U.S. companies looking to expand and grow their business on Chinese soil.

The Chinese spend a dizzying amount of money on travel to the U.S., including a significant amount directed toward U.S. college and universities for educational expenses. Those costs are not reciprocated by the U.S., putting the U.S. more at risk of loss in this category. Chinese officials can also make it more difficult for U.S. corporations to expand and operate in China, which would greatly hinder the development of many American companies. As evident when examining past relations with South Korea, the Chinese have not shied away from flexing their trade dollar muscles when imposing sanctions on tourism and toward foreign companies operating on their turf.