The agricultural products at the autarky situation

Running head: THE USA TRADE POLICY
The USA Trade Policy
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THE USA TRADE POLICY
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Executive Summary
The objective of the paper is to find out the rationales of the USA trade policy. The paper has
analyzed two popular international trade theories to support the objectives of the recent trade
policy. Import substitution strategy and Hecksher-Ohlin models are discussed in this paper. The
first theory is aimed at supporting the domestic economies as compared to the foreign economy.
Tariff imposition or quota restrictions are the popular applications of the import substitution
strategy. On the other hand, Hecksher-Ohlin model illustrated the effective allocation of the
factor endowments for production of two commodities. The model states that the USA economy
should emphasize on the export of the technological products as it is a capital-intensive country.

THE USA TRADE POLICY
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Table of Contents
Introduction......................................................................................................................................4
Discussion........................................................................................................................................4
Reference.......................................................................................................................................12

THE USA TRADE POLICY
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Introduction
The discussion of the current topic is focused on the recent trade policy adopted by the
Trump Administration. In general, the USA trade policies are aimed at overcoming the
challenges of the economic recession, unemployment, trade deficit and poverty. The USA
economy has incurred huge expenditure on the import goods. On the contrary, the export
earnings have experienced a sharp fall due to emerging trade dispute in the international market.
Apart from that, excessive import expenses on the defensive goods and services have lowered
has surpassed the export earnings from the technology sector. Moreover, significant contribution
of the agricultural sector to the country’s employment level is expected to widen the trade deficit
gap. Considering the fact, the USA government has formed a new trade policy focusing on the
export sector and optimum use of technology sector which is regarded as the driving source of
the USA economy.
Discussion
According to the current USA trade policy, the government is asked to focus on the
export of the advanced technological products rather than on the military equipment. The
advanced technology refers to the use of Machine Learning and Artificial language programs.
Meanwhile, the country is advised to downsize the import of agricultural products. The economy
currently imports two-third of the agricultural products, including cocoa, coffee, rubber etc. from
the foreign countries. This policy can be explained with the help of Heckscher –Ohlin model.
Labor and capital are the two principle factors of production. The model illustrates that factors
which have higher relative price will be intensively used. The monetary returns of the factors are
determined by its marginal production of labor and capital. The USA economy is capital-
intensive and follows free trade policy. Therefore, the USA has a comparative advantage in the