What is import?
Imports are goods or services purchased in one country and produced in another. Import and export are an integral part of international trade. If the value of a country’s imports exceeds the value of its exports, the country has a trade deficit, also known as a trade deficit.
The US has had a trade deficit since 1975. The deficit in 2019 was $576.86 billion, according to the U.S. Census Bureau.Be
- Imports are products or services produced abroad and purchased in your home country.
- Importing goods or services is attractive when domestic industries cannot produce similar goods and services cheaply or efficiently.
- Free trade agreements and tariff schedules often dictate which goods and materials are less expensive to import.
- Economists and policy analysts are divided on the positive and negative effects of imports.
Countries are most likely to import goods or services that their domestic industries cannot produce as efficiently or cheaply as exporting countries. Countries may also import raw materials or commodities that are not available within their borders. For example, many countries import oil because they cannot produce domestically or produce enough product to meet demand. Free trade agreements and tariff schedules often dictate which goods and materials are less expensive to import. U.S. imports of goods and services increased from $580.14 billion in 1989 to $3.1 trillion in 2019 amid globalization and the growing popularity of free trade agreements between the United States, other countries, and trade blocs.
Free trade agreements and reliance on imports from countries with lower labor costs often appear to be the main reasons for the decline in manufacturing jobs in importing countries. Free trade opens up the ability to import goods and materials from cheaper production areas and reduces reliance on domestic goods. The impact on manufacturing jobs was evident between 2000 and 2007, and was further exacerbated by the Great Recession and the slow recovery that followed.
Disagreement on imports
Economists and policy analysts are divided on the positive and negative effects of imports. Some critics argue that continued reliance on imports means less demand for domestically produced products, and thus may hinder entrepreneurship and commercial enterprise. Proponents say imports improve quality of life by giving consumers more choice and cheaper goods; the availability of these cheaper goods also helps prevent rampant inflation.
Real example of import
As of November 2020, the United States’ major trading partners include China, Canada, Mexico, Japan, and Germany.Two of these countries participated in the North American Free Trade Agreement (NAFTA), which was implemented in 1994 and created one of the largest free trade areas in the world at the time. With very few exceptions, this allows for the free flow of goods and materials between the United States, Canada and Mexico.Be
The US has been running a trade deficit since 1975.
It is widely believed that NAFTA has reduced auto parts and vehicle manufacturing in the United States and Canada, with Mexico being the main beneficiary of the agreement in this area. Labor costs in Mexico are much cheaper than in the U.S. or Canada, prompting automakers to move factories “south of the border.”
The minimum hourly wage paid to auto workers under a trade deal signed between the U.S., Canada and Mexico.Be
In 2018, the United States, Canada and Mexico agreed to replace NAFTA with the United States-Mexico-Canada Agreement (USMCA). Its highlights include:
- Require 75% of the car’s components to be produced in one of the three member states
- Set minimum wage for auto workers, expand union protections and sanctions for labor violations
- Expand intellectual property rights and ban tariffs on digital music and literature
- Giving American farmers access to Canada’s dairy market
USMCA went into effect on July 1, 2020.