Export Slowdown May Cause Higher Prices, Shortages, Delays

America's huge and tension-filled trade deficit with China could be eased and limited if inflation slows down the latter's mighty exporting machine. Trade deficit, or the negative balance of a trade in which the amount of a country's export is less than its imports, was the one of the underlying tensions during US President Barack Obama and Chinese President Hu Jintao's recent talks in the Washington.

Because of inflation, Western multinational companies are now cutting back on importation of products from the big manufacturer China, and consumers are balking at the higher prices of merchandise. Some of these companies have even canceled their shipping of raw materials across the Pacific.

There were markups of 20 to 50 percent on products across the range of industries, for example in clothing and shoes, that sent these Western multinational companies scrambling for alternative suppliers. Though there are available alternative suppliers, like Vietnam, India and other Southeast Asian countries, none could match China's manufacturing power and refuge from high global commodity prices.

The American shoppers would reel from limitations in trade deficit. In effect, the slowdown in export would expect higher prices or even temporary shortages of products in the coming months, according to manufacturers and distributors. They also say that delays on purchases are also expected, because most probably retailers would haggle over commodity prices.

Such delays and shortages could be prevented if Western buyers would renew contracts at a much higher cost. However, this implies that American shoppers should first accept and purchase the products, even at higher prices.

Credit Card Rates Reach Record Highs

Keeping a clean credit rating may be a good idea after all, as interest rates are now playing around all-time high records, at an average rate of 14.72%. Rates could even go as high as 59.9% annual percentage rate, that is, if one has a really bad credit rating.

The interest rates are currently hovering on such skyrocketing figures because the CARD Act didn't help at all in capping the interest rates themselves, even if it stopped some hidden fees, prevented banks from raising interest rates and required them to disclose as to why they are lending at such exorbitant figures. In short, there is still no limit on the rates banks can charge new customers.

Card issuers know that they can't raise the rates once customers are issued a card, so they have to raise rates upfront to ensure revenues from that interest. According to the weekly data of CreditCards.com, annual percentage rates have surged more than 20% within the past two years. The rates even hit an average 14.78% in November last year, an all-time high record.

To the average American consumer with a bad credit score, this means that opening a credit card account is going to be horrible, if a person even qualifies for a card issuance. Interest rates depend on the card being applied for, but for those with below 599, they are most likely going to face a painful annual percentage rate of 24% or higher.

And there's no end in this problem. Though there have been legislative proposals to cap interest rates at a reasonable limit, none have been passed into law yet.