The US has been one of the world’s major trading powers for most of the 20th century. It’s a manufacturing, trading, and technological powerhouse. Its massive impact on global trade and the economy is obvious.
They contribute a ton to the global export market of many areas, ranking #1 in several. The US also spends trillions on imported goods, services, and technology. The history of imported goods in America and the rise of the country’s successful trading policies are always worth reading.
Find out more on the history of its imported goods today and how it impacts the US economy, and in turn, you.
The American Import and Export Situation Now
In an average month, US imports exceed their exports. In the single month of August 2021, the difference was $617 billion. This gap has been growing since the global pandemic began.
The import economy and export economy have both been growing at a good pace. A gap has been widening because of a difference between goods and services. The services sector has historically enjoyed a surplus – around $16.2 billion a month in August.
This contrasts with repeated increases in the deficit of goods, which sit at $89.4 billion for August. This means that the US has been balancing a high import rate of goods against a high export of services. In essence, it enjoys a net-positive effect from its services sector.
This is in comparison to a growing net-negative in the goods sector. The goods deficit is outgrowing the services surplus. The US combined goods and services deficit is 33.7% larger than the same time last year and could continue to grow.
The Historical Effects of Tariffs on Imports
A tariff is a sort of tax levied on imported goods. Often it can be a fixed percentage based on the value of the imports, known as Ad valorem. Other times it’s a fixed amount per item or a rate that applies or changes when a certain quota is first reached.
Tariffs were a common economic fixture of global trade before WW2. They protected fragile and developing industries and often helped prop up home-grown ones. The US relied on these, especially in the 19th and early 20th centuries.
By taxing certain imported goods, the US discouraged an imbalanced import ratio. In the 1800s, America exported raw resources like cotton, lumber, tobacco, furs, food, and turpentine. They imported all manner of manufactured goods, including books, wine, and finished textiles.
Luxury goods, cutlery, and hardware were common, as domestic production levels were low. The US needed to import raw resources like coal and iron to develop its small manufacturing sector. Tariffs played a role in America’s industrial transition and changes to import goods.
Through tariffs, the US was able to make back some of the money it might otherwise lose to foreign markets. However, tariffs actually hurt trade in the long run. They lead to inflated prices and are often met with retaliatory counter-tariffs.
It suppresses the demand for imports, but this also suppresses potential growth. Leaving those methods and adopting free trade and low-tariff trade practices changed things. It allowed the US to embrace its industrial and manufacturing potential.
How the Rise of Rivals Changed American Imports
The competitive rise of rivals like China and others has slowed the US’s expansion. Even during the cold war, the US always imported sizeable amounts of raw materials for vehicles and computers. Growing competition meant these imports increasingly included sophisticated parts and finished goods.
The US found itself relying more on manufactured imports. In industries such as automotive, foreign brands came to stand toe to toe with domestic ones. This increased demand for foreign goods continued to skew the deficit towards imports.
Then the Trump administration hit rivals like China with steep tariffs. The aim of the over $360 billion dollar tariffs was to reduce the US trade deficit. It hoped to achieve this by protecting domestic industry from unfair competition.
This would allow it to grow and the economy to shed its reliance on imports. In actuality, domestic prices have increased while purchasing power has decreased. Retaliation from affected countries threatens to increase the deficit and hurt exports.
Domestic oil and gas prices are an example. 71% of all goods move through America via trucks. This makes stable prices crucial to the trade.
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Import Minded Trade Practices
For a large chunk of the 20th century, especially during the Cold War, America was the world’s factory. Along with select countries in Europe, they were manufacturing powerhouses. The US produced more goods, services, and technology than they knew what to do with.
Today the US still imports a lot of raw resources. Oil sits at the top at around $149.2 billion a year. Joining it is lumber at 20.3, gold at 16.5, and aluminum at 8.2 billion.
The import of manufactured goods is also massive. Cars make up $173 billion, computers $84 billion, car parts $64.9 billion, and rubber tires $13.3 billion. When it comes to exports, the US is close in some of these same areas.
The US exports $173 billion worth of cars and $84.8 billion worth of computers each year. This almost matches their imports – a result of strong competition and global trade. Vehicle parts sit at $43 billion, creating a hefty deficit.
A major deficit is oil. The US exports $71.32 billion worth of refined and crude petroleum. This contrasts with the $149.2 billion worth of imports already mentioned.
The US needs oil to meet its energy and manufacturing needs. It produces 75% of the oil it needs domestically, but it’s not enough. Reliance on huge amounts of imported oil is the current standard.
There are hopes that natural gas and renewables can make a difference and reduce oil imports.
Imported Goods Have a Long and Fascinating History
The US went from only importing raw materials to being an exporting powerhouse. America developed its industries and changed which imported goods it prioritized. It did this against a backdrop of historical changes in tariffs, competition, and global trade.
Want to learn more about American trade policies? Check out our other blog posts to discover more!
