What Is an Import?
An import is a good or service bought in one country that was produced in another. Imports and exports are the components of international trade. If the value of a country's imports exceeds the value of its exports, the country has a negative balance of trade (BOT), also known as a trade deficit.
The United States has experienced a trade deficit since 1975. It stood at $49.3 billion in November 2018, according to the U.S. Bureau of Economic Analysis and the U.S. Census Bureau.
The Basics of an Import
Countries are most likely to import goods or services that their domestic industries cannot produce as efficiently or cheaply as the exporting country. 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 it domestically or cannot produce enough to meet demand. Free trade agreements and tariff schedules often dictate which goods and materials are less expensive to import. With globalization and the increasing prevalence of free-trade agreements between the United States, other countries and trading blocks, U.S. imports increased from $473 billion in 1989 to $2.3 trillion as of the third quarter of 2018.
Free-trade agreements and a reliance on imports from countries with cheaper labor often seem responsible for a large portion of the decline in manufacturing jobs in the importing nation. Free trade opens the ability to import goods and materials from cheaper production zones and reduces reliance on domestic goods. The impact on manufacturing jobs was evident between 2000 and 2007, and it was further exacerbated by the Great Recession and the slow recovery afterward.
- Imports are goods or services brought into one country from another country.
- Countries are most likely to import goods or services that their domestic industries cannot produce as efficiently or cheaply as the exporting country.
- Free trade agreements and tariff schedules often dictate which goods and materials are less expensive to import.
- Economists and policy analysts disagree on the positive and negative impacts of imports.
Disagreement About Imports
Economists and policy analysts disagree on the positive and negative impacts of imports. Some critics argue that continued reliance on imports means reduced demand for products manufactured domestically, and thus can hobble entrepreneurship and the development of business ventures. Proponents say imports enhance the quality of life by providing consumers with greater choice and cheaper goods; the availability of these cheaper goods also help to prevent rampant inflation.
Real Life Example of Imports
The United States' top trading partners, as of November 2018, include China, Canada, Mexico, Japan, and Germany. Two of these countries were involved in the North American Free Trade Agreement (NAFTA) that was implemented in 1994 and, at the time, created one of the largest free-trade zones in the world. With very few exceptions, this allowed the free movement of goods and materials between the United States, Canada, and Mexico.
The United States has experienced a trade deficit since 1975.
It is widely believed NAFTA has reduced automotive parts and vehicle manufacturing in the United States and Canada, with Mexico being the main beneficiary of the agreement within this sector. The cost of labor in Mexico is much cheaper than in the United States or Canada, pushing automakers to relocate their factories "south of the border."
U.S. imports increased 4.85x over the past 20 years, from $473 billion in 1989 to $2.3 trillion as of the third quarter of 2018.
On Nov. 30, 2018, the U.S., Canada, and Mexico signed a trade agreement to replace NAFTA with the United States–Mexico–Canada Agreement (USMCA). Its highlights include:
- Extending intellectual property copyrights and pharmaceutical drug patents, and prohibiting duties on digital music and literature
- Requiring automobiles to have 75% of their components made in one of the three member nations
- Setting a minimum wage for autoworkers and extending union protections and sanctions for labor violations
- Giving the U.S. farmers access to Canada's dairy market
The countries' legislatures have not ratified USMCA as of February 2019.