Import

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What is an 'Import'?

An import is a good or service brought into one country from another. The word "import" is derived from the word "port" since goods are often shipped via boat to foreign countries. Along with exports, imports form the backbone of international trade. If the value of imports entering a country is greater than the value of exports, the country is considered to have a negative balance of trade.

BREAKING DOWN 'Import'

Countries are most likely to import goods 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 its borders. For example, many countries import oil because they cannot produce it domestically or cannot produce enough of it 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 $2.2 trillion in 2016.

What Affects Imports

The largest trading partners with the United States include China, Canada and Mexico. Two of these countries are involved in the North American Free Trade Agreement (NAFTA) that was implemented in 1994 and created one of the largest free trade zones, at the time, in the world. This allowed the free movement of goods and materials within the host nations of the United States, Canada and Mexico with a few exceptions.

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, creating a long-term effect whereby automotive manufacturers have relocated to Mexico.

Large Imports Reduce Manufacturing

Free trade agreements and a reliance on imports from cheaper labor locales are responsible for a large portion of the decline in manufacturing jobs. Free trade opens up the ability to import goods and materials from cheaper production zones and reduces the reliance on domestic goods. The effect on manufacturing jobs was evident during the period 2000 to 2007 and was further exacerbated by the Great Recession and the slow recovery afterward.

Imports vs. Exports

The United States has experienced a trade deficit since 1975, the last year in which it saw a trade surplus. Economists and policy analysts are split on the positive and negative impacts of imports. Continued imports mean reliance on other sources for much of U.S. consumer product demand while imports enhance the quality of life with cheaper goods. Economists feel these cheaper imports compared to domestic manufacturing have also helped prevent rampant inflation.