Jane Ferlengeti, a U.S. citizen, purchases a phone for $300 that Apple imported from China. Apple paid its Chinese subsidiary $150 for the phone. How did these transactions change the U.S.-Chinese bilateral trade balance?

Question

Quizplus · Accepted Answer

This transaction increased U.S. imports by $300, but China's exports only increased by $150 since that was the cost of the phone from Apple's Chinese subsidiary. Therefore, the U.S.-Chinese bilateral trade balance worsened by $150.