The U.S. dollar's decline is having the predicted effect on sales of U.S. goods abroad - - but it's a positive metric that may draw more international debate, if the current dollar-lower trend continues.The U.S. trade deficit narrowed 0.6% to $56.4 billion in September 2007, as international demand for goods like aircraft engines and machines increased, the U.S. Commerce Department announced. In September 2007 imports totaled $196.6 billion; exports, $140.2 billion. Further, through September, the trade deficit is running at an annual rate of $703.4 billion, down 7.4% from the same period a year ago.
The euro and pound have risen to $1.4677 and $2.0905 against the dollar - - a trend that has reduced the cost of American products purchased by foreign companies. The lower dollar also lowers the cost for Europeans to travel and buy goods in the states. Each has helped narrow the trade deficit, the Commerce Department noted.
Economic Analysis: While it's hard to envision trade tensions breaking out given the United States' perennial trade deficit status, the U.S.'s open markets, along with domestic consumption, have been major factors in the U.S.'s trade deficit. Trade tensions, in fact, may become the case, if the dollar continues to fall against the euro and the pound. Economists, trade analysts and foreign exchange professionals don't agree as to the level at which the European Union would begin to complain that "the euro is too strong against dollar." Still, there's discussion that suggests that a euro rising to $1.60 or $1.70 would prompt concern from Europe's companies, along with an ensuing effort by policy makers to strengthen the dollar and/or weaken the euro.
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Reader Comments (Page 1 of 1)
11-12-2007 @ 6:06PM
Skipper said...
That is why I am buying 3M. They are positioned to make money in the US and overseas. What a real value while the price is significantly lower than $100 per share. Current in the $80 range.