Trade: Trade Deficits and Imports 
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Trade Deficit with China Not a Bad Thing
The Chinese currency – pegged artificially low against the U.S. dollar – has long been a topic of political debate, and with the current economic crisis some are claiming that the ensuing trade deficit hurts American jobs. Cato scholar Dan Ikenson dispels that myth by explaining how in the globalized economy the U.S. actually benefits from undervalued Chinese currency. He adds that “forcing China to appreciate its currency through sanctions will impose higher prices on American consumers, thereby reducing Americans' real incomes." The current situation allows Americans to benefit twice: once when purchasing inputs for production in the U.S., and again when purchasing final consumer goods from China. Our politicians should be aware that acting on impulse and not fact is setting us up for even harder economic times.