U.S.& Cuba Relationship

Jose Alvarado

April 21st/2016

U.S. & Cuba

Cuba and the U.S.A have been struggling since Castro took out Batista from the government power of Cuba. The overthrown was of great concern to the U.S.A because Castro was known as a communist, which means no ones makes more profit than any other regardless their jobs.

Later on, the Soviet Union was getting nuclear weapons into Cuba. The U.S.A. tried to intercept their ships. America was scared from the fact that Cuba is relatively close to them, geographically speaking. World War III was almost unleashed, but an agreement kept the Russians from entering nuclear weapons to Cuba and the U.S.A had to take their nuclear weapons from Turkey.

Then, Cuba and the USA had prisoners of one another’s citizens and they agreed to make exchanges among them. Cuba and the U.S.A haven’t had a strong relationship since 1961, because of all this incidents and more to come.

Eventually, Washington cut ties with Cuba; there were no imports and exports aloud. Americans were not able to spend money on Cuba or even travel to Cuba. America was disposed to not give a single penny to the economy of Cuba, knowing that it would hurt Cuba economically and politically. Recently, Barack Obama visited Castro and made a deal were Americans will be aloud to trade and spend and travel to Cuba, bringing both of them profit.

Because of the “Trade Embargo”, Cuba had an economic decline. The amount of goods they produced declined from the fact that there were not many traders to sell it to. The U.S.A. is the top 5-trade partner for Cuba. Once Cuba didn’t have them as partners, the amount of goods produced was not as high as they should have been.

“The Cuban government estimates that more than fifty years of stringent trade restrictions has amounted to a loss of $1.126 trillion.” (Renwick, CFR Backgrounders) The Cuban government gives us the idea that their exports income would have been higher if U.S.A would have never stopped buying from them. But because they lost one of their top five exporters then their imports were higher than their exports. Cuba was having a trade deficit.

When the United States and Cuba stopped with their imports and exports among them, it caused a decreased in the Nation’s GDP, primarily in Cuba. U.S.A has other great partners to trade with, so they weren’t affected as much.

When the U.S.A stopped their trading relationship with Cuba, Cuba’s overall net exports decreased. Not only the new agreement between Cuba and U.S.A will increase Cuba’s GDP, but also U.S.A’s GDP. Cuba needs more from U.S.A goods than U.S.A from Cuba’s goods. Meaning, U.S.A will definitely export more to Cuba than import from them causing a surplus in the balancing trade, hopefully increasing the Economy in both sides.

Now, U.S.A citizens will be able to invest in small business in Cuba; the Net Capital Outflow will increase if Americans do actually invest in Cuba. Hopefully the capital flow of Cuba will increase over time, increasing jobs and incomes, as long as the Cuba government keeps their word.

Renwick, Danielle. "U.S.- Cuba Relations." Council on Foreign Relations. Council on Foreign Relations, 24 Mar. 2016. Web. 21 Apr. 2016. <http://www.cfr.org/cuba/us-cuba-relations/p11113>.