Analysis of question
The Benefits of International Trade
America cannot have a growing economy or lift the wages and
incomes of our citizens unless we continue to reach beyond our
borders and sell products, produce, and services to the 95% of the
world’s population that lives outside the United States.
WHY IS TRADE IMPORTANT?
- Jobs. Nearly 39 million American jobsdepend on
trade, and trade is critical to the success of many sectors of the
U.S. economy.
- Growth. According to economic datafrom the
Federal Reserve Bank of St. Louis, U.S. real manufacturing output
has risen by nearly 80% over the past 25 years. This represents the
continuation of a long trend: U.S. manufacturing value-added has
grown eightfold since 1947 in real terms.
- Business. 98% of the roughly 300,000 U.S.
companies that export are small and medium-sized businesses, and
they account for one-third of U.S. merchandise exports, according
to the U.S. Department of Commerce. The number of small and
midsized firms that export has risen about threefold over the past
two decades.
TRADE AND MANUFACTURING
- Vast productivity gains relating to increased use of automation
and information technologies have helped U.S. manufacturers retain
and in many areas enhance their global competitiveness in recent
years, even as the number of Americans employed in manufacturing
has declined since its peak in 1979.
- U.S. exports of manufactured goods reached nearly $1.4 trillion
in 2018, accounting for 56% of all U.S. exports.
- The U.S. Department of Commerce estimates that exports of
manufactured goods directly support more than 6 million U.S.
manufacturing jobs—roughly half of all manufacturing
employment.
TRADE AND U.S. SERVICES
- U.S. exports of services are also booming, reaching $828
billion in 2018, according to the U.S. Department of Commerce.
- The United States is by far the world’s largest exporter of
services, and America’s globally competitive service
industries—including audiovisual, banking, energy services, express
delivery, information technology, insurance, and
telecommunications—benefit immensely from opportunities
abroad.
TRADE AND FARMING
- American farmers and ranchers also depend on exports. The same
is true for America’s farmers and ranchers. About 25% of U.S. farm
products by value are exported each year.
- For many crops, such as wheat or almonds, more than half is
sold abroad. U.S. agriculture is so productive there’s no way
Americans could consume this bounty alone.
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BENEFITS OF IMPORTS
- Amid a renewed focus on boosting U.S. exports, it is important
to bear in mind that imports benefit Americans as well. They bring
lower prices and more choices for American families as they try to
stretch their budgets. Companies also depend on imports for raw
materials and competitively priced inputs.
- Imports give us access to products that would not otherwise be
available—such as fresh fruit in the winter. Access to imports
boosts the purchasing power of the average American household by
about $18,000 annually.
- Companies’ imports of intermediate goods, raw materials, and
capital goods account for more than 60% of all U.S. goods
imports—lowering costs for manufacturers and other businesses and
helping them hone their competitive edge.
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FREE TRADE AGREEMENTS
Indeed, tremendous benefits have flowed from U.S. free-trade
agreements (FTAs), which cover 20 countries.
- These countries represent approximately 6% of the world’s
population outside the United States, and yet these markets
purchased nearly half of all U.S. exports, according to the U.S.
Department of Commerce. In other words, U.S. FTAs do an outstanding
job making big markets even out of small economies.
- The trade balance is a poor measure of the success of these
agreements, but deficits are often cited by trade skeptics as a
reason why the United States should not negotiate free trade
agreements. However, with regard to manufactured goods, the United
States ran a cumulative trade surplus with its trade agreement
partner countries of $249 billion over the past nine years
(2009-2018), according to data from the U.S. Department of
Commerce.
- Overall, looking at trade in all goods and services, the United
States had a tiny trade deficit with its 20 trade agreement
partners as a group over the 2009-2017 period (latest available for
services trade data). The cumulative total was about $25
billion—less than two thousandths of one percent of total trade
with these countries during this nine-year period.
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In the end, we cannot turn our back on international trade. It
is an inevitable part of the world in the 21st century. We simply
need our elected leaders to prioritize initiatives to open foreign
markets so that U.S. companies can sell more of our goods and
services overseas.
Trade can provide a path to jobs and prosperity if we have the
courage to seize it.