U.S.- Cuba Relations

Drew Mikula

Dr. Kassens

Econ 122

The U.S. placed an embargo on Cuba for over 50 years.  This means that the U.S. has cut off all most all exports excluding some medicine and agricultural products.  The reason for this is because over 50 years ago Cuba and the U.S. got on bad terms over Castro being president, the Cuban Missile Crisis, and the Bay of Pigs invasion.  The embargo includes a ban on trade between the U.S. and Cuba; the U.S. is not buying Cuba’s goods like sugar or even cigars.  The U.S. also placed strict travel restrictions on visiting Cuba.  To make things worse between Cuba and the U.S. in 2009 a U.S. man was arrested in Cuba because they thought that we was trying to bring down the Cuban regime, when all he was trying to do was give internet access to the Jewish community.            

            This embargo has hurt the economy of Cuba because of their lack of trading partners.  It did not hurt the U.S. very much because we are a superpower and have many other trading partners.  The Cuban government says that the restrictions on trade amount to a $1.126 trillion (Renwick, 2016).  Before the embargo Cuba’s main place to export goods was to the U.S.  An export is a good or service that is domestically made but the good or service is sold abroad.  The embargo caused Cuba’s exports to fall since the U.S. was the main place for Cuba to export goods.  The amount of imports fell by a little for the U.S. because Cuba is one of many places where the U.S. buys goods and services.  An import is a good or service that from a foreign and then sold domestically.  Net export is the exports minus the imports.  The trade embargo likely lowered Cuba’s net exports since their exports fell, causing Cuba to be in a trade deficit.  The U.S. is also in a trade deficit because the U.S. imports more goods and services then it exports from other countries around the world.  The net capital outflow for Cuba would also be lower because of this embargo.  The reason for that is because the U.S. cut off almost all travel to Cuba and cut off Cubans traveling to the U.S. .  That means that Cubans people will not be going to the U.S and buying foreign goods and services.  Overall the embargo has caused the economy in Cuba to shrink.

            Recently, the U.S. and Cuba have started to make new rules for the embargo. U.S. people are now allowed to travel to Cuba and they are also allowed to spend money there.  This will cause Cuba’s net exports to start rising again because U.S. people will be in Cuba spending money for Cuba’s goods and services.  This is good news for Cuba’s economy because the in flow of money to Cube will help the economy of Cuba grow.         

References

Renwick, D. (2016, March 24). U.S.- Cuba Relations. Retrieved April 19, 2016, from http://www.cfr.org/cuba/us-cuba-relations/p11113