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Hi I'm Adrienne Hill, and I'm Jacob Clifford and welcome to Crash Course Economics. Today we're going to talk about international trade. So we all know our stuff is from everywhere. Bangladesh, China, Vietnam, China again, but what does it actually tell us about the global economy or the US economy? And who is benefitting from all this trade. And who's going to clean all this up? [Theme Music] International trade is the lifeblood of the global economy. Basically when a good or service is produced in, let's say, Brazil and sold to a person or business in the US, that counts as an export for Brazil and as an import from US. As you might expect, the United States is the world's largest importer because Americans love their stuff. In 2014 Americans import over two trillion dollars worth of stuff, like oil cars and clothing from countries all over the world. And if you look around your local big box store, it feels like everything is made in China. And we do import a lot of things from China but in terms of both imports, and exports our largest trading partner's not China, it's Canada. The US and Canada trade over six hundred billion dollars worth of goods and services each year. The US imports a lot from Canada but exports almost as much. In fact, the United States is the world's second-largest exporter. It sells high-tech things like pharmaceuticals, jet turbines, generators and aircraft to countries all over the world. It also exports intellectual goods like Kanye West albums and Pixar movies as well as bulk commodities like corn, oil and cotton. The annual difference between a country's exports and imports is called net exports. So if Brazil exports 250 billion dollars worth of goods and imports 200 billion that its net exports are fifty billion. That means Brazil has a trade surplus. In 2014, net exports in the US more negative 722 billion dollars. That's what you call a trade deficit. Some people assume that having a trade deficit is inherently bad. Why does the US import nearly all clothing? Why can't we clote ourselves? US producers could easily make more than enough clothing to keep all of us dressed. But they don't because they focus on other things that they're better at producing. The US buys clothes from other countries because we can get them cheaper than if we made them here. This is the value of international trade. It doesn't make sense to make everything on your own if you can trade with other countries that have a comparative advantage. It's worth mentioning here that these savings sometimes come with other costs, especially for the people who are producing these goods overseas. Unsafe and unfair working conditions, and environmental degradation can be ugly side effects of international trade. And we're gonna talk about that. For today though let's get a handle on trade deficits. It can seem like exporting would make a country wealthy while importing would make it poor. After all, if we buy products produced in other countries than...
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