Interrelation Between The U.S. Trade Deficit And USD Real Exchange Rate

For the past few years, the imbalance of global economic became more and more serious. Most of the scholars think the major factor is the imbalance of American external economy. The first time that American has trade deficit is the year 1971. Since that time, the situation of American trade deficit has nerve been changed. In the 1990s, American trade deficit has greatly increased year by year. American people have a wrong realization of their deficit, they consider that the appreciation of the USD exchange rate result in their big deficit. And it always is being the reason that American forced its trade partners to appreciate their exchange rate. In 1985, Plaza Accord was signed, Japan, French, Germany has been forced to appreciate their currency to alleviate American trade deficit. But in fact, the appreciation of these countries' currency failed to reverse the situation of American trade deficit. Entering the 21's century, the China-U.S. trade and economic relationship has become the most important relationship in the world. The development of the China-U.S. trade and economic has been deeply and wildly heightened. At the same time, China is becoming the biggest deficit country to American bilateral trade. The American pressure on China to revaluate currency is getting higher and higher. In July 2005, our countries carried out a reform of the exchange rate system. After the reform, a strong rise in expected and a unilateral trend of the RMB exchange rate, increasing the floating space. Since then, however, American trade deficit to China continues to expand. The USD exchange rate movement failed to reverse the situation of American trade deficit, is it shows that the movements of exchange rate on international trade balance of payments impact limited or no impact?The interrelation between the U.S. trade and USD exchange rate has always been a concern of the world. In this paper, we gave an overview of exchange rate moments on the trade balance of payment's impact of the theory of evolution. And then we gave an overview of domestic and foreign scholars' research achievements on this field. Based on the data of bilateral trade balance between the U.S. and its main trade partners China, we analysis the interrelation between the U.S. trade and the real exchange rate of USD. All of the researches think that the real exchange rate of USD has seriously small effect on the U.S. trade deficit. At last, we obtain the main conclusion:the real exchange rate of USD is not the major factor which affects the balance of the U.S. payment. The American pressure on other countries to relative their currency has not and will not alleviate the U.S. trade deficits.