Reason of the Surge in Imports
The rapid increase in U.S. imports in 2010 was too high to compare with the macroeconomic indicators. In fact, the surge in imports came in handy to help the world overcome the 2010 recession. This is because recession would cause people to spend more due to the high inflation rates, which make the prices of goods and services high. It can, therefore, be said that one of the reasons that boosted the U.S. imports was because the world was just from a recession. In a bid to recover from the recession, the imports grew tremendously. Another cause was the increasing number of immigrants who were flocking into the country, leading to the high demand for most of the imported goods. Some of the macroeconomic factors that led to the surge include a reduction in the VAT, removal of import quotas, increased per capita consumption, as well as increased demand, as mentioned earlier.
Nevertheless, this situation was not to remain for long as in the following year trade collapsed once again. This can first be attributed to the assimilation of the immigrants into the nation, thereby causing the trade to weaken. Secondly, the surge in imports widened the trade deficit, thus, causing a collapse in the trade market. The widening of the trade deficit occurs because the gap between the imports and the exports is large given the fact that the country is importing more than it is exporting. This is normally very unhealthy for an economy as the two (imports and exports) are expected to balance. As such, if the trade deficit is widened, trade is affected, leading to a collapse of either of the key players of the trade, in this case, the imports or exports.