It is worth noting that an import is a good or service bought in one country that was produced in another country. People should keep in mind that imports, as well as exports, are the components of international trade. Interestingly, if the value of a country’s imports exceeds the value of its exports, the country has a negative balance of trade, also known as a trade deficit.
For example, let’s have a look at the world’s largest economy. As a reminder, the U.S. has run a trade deficit since 1975. Importantly, the deficit stood at $576.86 billion in 2019, based on the information provided by the U.S. Census Bureau.
Interestingly, countries are more likely to import goods or services that their domestic can’t produce as efficiently or cheaply as the exporting country. Furthermore, countries may have to import raw materials or commodities that are not available within their borders. For instance, many countries import oil because they can’t produce it domestically. Another reason is that the country can’t produce enough to meet the demand.
People should take into account that free trade agreements, as well as tariff schedules, often dictate which goods and materials are less expensive to import. Globalization plays an important role in the process. As a result of globalization and the increasing prevalence of free-trade agreements between the U.S., other countries, and trading blocks, U.S. imports of goods and services rose from $580.14 billion in 1989 to $3.1 trillion as of 2019.
Imports and different points of view
As stated above, imports and exports are the components of international trade. However, free-trade agreements and dependence on imports from countries with cheaper labor often seem responsible for a large portion of the decline in manufacturing jobs in the importing nation.
As a reminder, free trade opens the ability to import goods and materials from cheaper production zones. For instance, the impact on manufacturing jobs was evident between 2000 and 2007. Moreover, it was further exacerbated by the Great Recession and the unsatisfactory pace of economic recovery.
It is worth noting that economists and policy analysts disagree on the positive and negative impacts of imports. Interestingly, some critics argue that continued reliance on imports means reduced demand for products manufactured in the country. Consequently, this factor has the potential to have a negative impact on the development of business ventures. According to proponents, imports enhance the quality of life by providing consumers with greater choice and cheaper goods.