What is an import?
When you buy something in one country that was made in another, that’s called an import. International trade is made up of imports and exports. This is called a trade imbalance. A country has a negative trade balance if the value of its imports is higher than its exports.
Since 1975, the US has had a trade imbalance. As of 2019, the U.S. Census Bureau said the imbalance was $576.86 billion.
How an Import Works: The Basics
Most of the time, countries import things or services that their industries can’t make as quickly or cheaply as the exporting country. A country can also bring in goods or raw materials unavailable within its limits. For example, many countries buy oil because they can’t make it themselves or make enough to meet demand.
A lot of the time, tariff schedules and free trade agreements say which things and materials are cheaper to bring in. U.S. imports of goods and services rose from $580.14 billion in 1989 to $3.1 trillion in 2019. This is due to globalization and more free-trade deals between the U.S., other countries, and trading blocks.
Free-trade deals and relying on imports from countries with cheaper labor are often blamed for a significant drop in manufacturing jobs in the country that buys the goods. Free trade lets people bring in goods and materials from cheaper production zones, so people don’t have to rely as much on goods made in their own country. Between 2000 and 2007, it was clear that factory jobs were being hurt, and the Great Recession and slow recovery afterward made it worse.
Not Agreeing on Imports
Economists and policy experts have different ideas about whether imports are good or bad. Some critics say that continuing to rely on imports can hurt business growth and creativity because it lowers demand for goods made in the United States. People who support imports say they improve the quality of life by giving people more choices and cheaper goods. These cheaper goods also help to keep inflation from getting out of hand.
An Example of Imports in Real-Life
At the end of November 2020, China, Canada, Mexico, Japan, and Germany were the United States’ top trade partners. A North American Free Trade Agreement (NAFTA) in 1994 included two of these countries. It was one of the world’s most extensive free trade zones at the time. This rule had few exceptions, which let things and materials move freely between the US, Canada, and Mexico.
Since 1975, the US has had a trade imbalance that hasn’t gone away.
Many think that NAFTA has made it harder for the US and Canada to make auto parts and vehicles. In this area, Mexico has benefited the most from the deal. Since it is much cheaper to hire workers in Mexico than in the US or Canada, automakers have moved their plants “south of the border.”
The lowest wage that autoworkers must make each hour to work on certain cars is under a trade deal that the US, Canada, and Mexico signed.
The USMCA, the United States-Mexico-Canada Agreement, will replace NAFTA in 2018. Some of its best features are:
Requiring that 75% of the parts in cars come from one of the three-member countries
Autoworkers should be paid a basic wage, and unions should be given more rights and punished for breaking the law.
Increasing royalties for intellectual property and banning taxes on digital music and books
Getting U.S. farmers into Canada’s dairy business
The US Trade Representative’s Office. “USMCA Fact Sheet: Agriculture Goods,”
Conclusion
- An import is a good or service made elsewhere but bought in your own country.
- When domestic companies can’t make the same goods and services cheaply or quickly, people want to buy them from other countries.
- A lot of the time, tariff schedules and free trade agreements say which things and materials are cheaper to bring in.
- Economists and policy experts have different ideas about whether imports are good or bad.
