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. More than 40 million American jobs depend on trade, and trade is critical to the success of many sectors of the U.S. economy.
- Growth. According to economic data from 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.
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 2019, accounting for more than 82% of all U.S. merchandise 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 nearly $850 billion in 2019, 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. 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.
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.
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 purchase 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 more than $200 billion over the past decade (2009-2019), according to data from the U.S. Department of Commerce.
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.
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As someone deeply immersed in the world of international trade, I can attest to the multifaceted impact it has on a nation's economy. My expertise is grounded in extensive research, practical experience, and a keen understanding of the interconnected dynamics of global commerce. I have actively followed economic trends, policy developments, and trade agreements to provide a comprehensive view of the subject matter.
Let's delve into the concepts highlighted in the provided article:
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Importance of Trade for Economic Growth and Jobs:
- The article underscores the pivotal role of trade in the U.S. economy, emphasizing that over 40 million American jobs are reliant on trade.
- Economic data from the Federal Reserve Bank of St. Louis is referenced, indicating that real manufacturing output in the U.S. has seen an impressive 80% increase over the past 25 years.
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Small and Medium-Sized Businesses in Trade:
- The article points out that 98% of U.S. companies engaged in exports are small and medium-sized businesses. These enterprises contribute significantly, accounting for one-third of U.S. merchandise exports.
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Trade and Manufacturing:
- Despite a decline in manufacturing employment since 1979, U.S. manufacturers have maintained global competitiveness through productivity gains, including increased automation and information technologies.
- U.S. exports of manufactured goods reached nearly $1.4 trillion in 2019, supporting more than 6 million U.S. manufacturing jobs.
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Trade and U.S. Services:
- The U.S. is the world's largest exporter of services, with exports reaching nearly $850 billion in 2019.
- Various globally competitive service industries, such as audiovisual, banking, energy services, express delivery, information technology, insurance, and telecommunications, benefit from international opportunities.
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Trade and Farming:
- American farmers and ranchers heavily rely on exports, with about 25% of U.S. farm products, by value, exported each year.
- Certain crops, like wheat or almonds, see more than half of their production sold abroad, emphasizing the importance of international markets.
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Benefits of Imports:
- The article highlights the importance of imports, which provide lower prices and more choices for American families.
- Imports play a crucial role for companies by providing access to raw materials and competitively priced inputs, ultimately lowering costs and enhancing competitiveness.
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Free Trade Agreements (FTAs):
- The benefits of U.S. free-trade agreements (covering 20 countries) are emphasized, with these markets representing approximately 6% of the world’s population but accounting for nearly half of all U.S. exports.
- Despite concerns about trade deficits, data from the U.S. Department of Commerce indicates a cumulative trade surplus with trade agreement partner countries of over $200 billion in the past decade for manufactured goods.
In conclusion, the article underscores the intricate web of economic interdependence fostered by international trade, emphasizing its indispensable role in fostering economic growth, creating jobs, and enhancing the prosperity of the United States.
