What is an Import?
An import is a good or service brought into your country but produced elsewhere. Imports and exports are crucial components of international trade. If a nation’s import value surpasses its export value, it experiences a negative balance of trade, often termed a trade deficit.
The United States, for instance, has faced trade deficits since 1975, with 2019 seeing a deficit standing at $576.86 billion, as per the U.S. Census Bureau.
Key Takeaways
- An import is a product or service produced abroad and purchased domestically.
- Imported items become appealing when local industries cannot produce them cost-effectively.
- Trade agreements and tariff regulations often determine the expense involved in importing goods.
- There is ongoing debate about the pros and cons of imports among economists and policy analysts.
Mastering the Basics of Imports
Nations generally import items that their local industries cannot produce as efficiently or inexpensively as exporting nations. They might also import raw materials and commodities not available domestically, like oil, which many countries require but cannot produce in sufficiency.
Free trade agreements and tariff schedules play pivotal roles in defining which resources and products are cost-effective to import. With globalization and more free-trade pacts, U.S. imports of goods and services climbed from $580.14 billion in 1989 to $3.1 trillion by 2019.
Relocation of manufacturing jobs to nations with lower production costs, often due to free-trade agreements, is evident. The impact on manufacturing jobs was prominent between 2000 and 2007 and marked further by the Great Recession.
The Debate on Imports
Experts are divided on the benefits and drawbacks of imports. Critics argue that a dependency on imports dampens the growth of local industries, stifling entrepreneurship and new business ventures. Advocates, conversely, suggest that imports elevate the quality of life by offering broader choices and more affordable goods, aiding in inflation control.
Real-Life Examples of Imports
Several nations are integral to U.S. international trade, such as China, Canada, Mexico, Japan, and Germany. Canada and Mexico were once part of the North American Free Trade Agreement (NAFTA), which formed a significant free-trade zone allowing the fluid movement of goods between the three countries since its inception in 1994.
Post-NAFTA, the U.S. observed a consistent trade deficit. Critics attribute a loss in automotive jobs in the U.S. and Canada to reduced labor costs in Mexico, where many factories moved.
$16: The Ringing Figures
This figure represents the minimum hourly wage paid to autoworkers for select cars under a trade accord among the U.S., Canada, and Mexico.
In 2018, a new trade agreement termed USMCA replaced NAFTA. Key elements of USMCA include:
- Mandating 75% of vehicle components be made within member countries.
- Establishing minimum wages and extending union protections for autoworkers.
- Enhancing intellectual property rights and banning tariffs on digital media.
- Granting U.S. farmers access to Canada’s dairy market.
USMCA came into effect from July 1, 2020.
Related Terms: exports, trade deficit, balance of trade, free trade agreements, globalization.
References
- U.S. Census Bureau. “U.S. Trade in Goods and Services - Balance of Payments (BOP) Basis”, Page 1.
- Federal Reserve Bank of St. Louis. “All Employees, Manufacturing”.
- U.S. Census Bureau. “Top Trading Partners - November 2020”.
- U.S. Customs and Border Protection. “North American Free Trade Agreement”.
- Office of the United States Trade Representative. “USMCA Facet Sheet: Autos and Auto Parts”, Page 1.
- Office of the United States Trade Representative. “Joint Statement from United States Trade Representative Robert Lighthizer and Canadian Foreign Affairs Minister Chrystia Freeland”.
- Office of the United States Trade Representative. “USMCA Fact Sheet: Intellectual Property”, Page 1.
- Office of the United States Trade Representative. “USMCA Fact Sheet: Digital Trade”, Page 1.
- Office of the United States Trade Representative. “USMCA Fact Sheet: Agriculture Goods”, Page 1.
- Office of the United States Trade Representative. “United States-Mexico-Canada Agreement”.
