This chapter demonstrates how policy goals at the aggregate macro policy level are translated to trade flows (exports and imports) and at the analytical level. The different patterns of trade policy—which will bring balanced trade with the Pacific Rim—will also create international trade risk. The key question in international economics today is how the United States and the world will adjust to the inevitable reversal of America's mammoth trade deficit. That is how the “overconsuming” United States and its “underconsuming” trade partners will rapidly transform their economies so as to...

This chapter demonstrates how policy goals at the aggregate macro policy level are translated to trade flows (exports and imports) and at the analytical level. The different patterns of trade policy—which will bring balanced trade with the Pacific Rim—will also create international trade risk. The key question in international economics today is how the United States and the world will adjust to the inevitable reversal of America's mammoth trade deficit. That is how the “overconsuming” United States and its “underconsuming” trade partners will rapidly transform their economies so as to convert America's recent trade.