By: Dr. M. Ray Perryman
Published in syndication April 06, 2022
Since the beginnings of people living in social groups millennia ago, goods have been exchanged in some form. Through imports and exports, consumer choice improves, prices are reduced, business opportunities escalate, and economies grow. The essential mathematics explaining the process were worked out in the early 1800s. Pandemic-induced supply chain snarls have illustrated the interconnectedness of the contemporary world and just how much consumers rely on a steady stream of imports.
Trade is necessary for the efficient functioning of the economy. Most products that are exported from the United States have been manufactured or processed domestically, creating opportunities for companies that make, market, transport, process, create, or otherwise participate in the production chain as well as their employees. Ripple effects enhance the benefits. For goods that are imported, there are downstream impacts for inputs to manufacturing processes, and even finished goods lead to logistics, retail sales, and other activity.
Overall volumes of US imports dipped during the worst of COVID-19 but have rebounded. The total value of imports was $2.8 trillion in 2021. Of that amount, consumer goods were $766.7 billion, capital goods (which is a range of products from semiconductors and computers to telecommunications equipment to aircraft) were $762.8 billion, and industrial supplies (which includes petroleum) were $649.4 billion. The rest included automobiles; foods, feeds, and beverages; and many other goods. Exports in 2021 totaled almost $1.8 trillion, with the largest categories being industrial supplies ($635.5 billion), capital goods ($519.6 billion), and consumer goods ($222.1 billion).
About three-fourths of all trade is with our top 15 trading partners. Exports to Canada were $307.6 billion, with Mexico second ($276.5 billion). Next were China ($151.1 billion), Japan ($75.0 billion), and then South Korea, Germany, and the UK. The highest import values were from China ($506.4 billion), Mexico ($384.7 billion), Canada ($357.2 billion), and Germany ($135.2 billion), followed by Japan, Vietnam, and South Korea.
Amazingly, about 20% of all US exports leave for foreign markets from Texas. Major products include petroleum (crude oil as well as refined products and, increasingly, liquefied natural gas); electronic processors and computer equipment; aircraft, engines, and parts; and chemicals. Top markets are Mexico, Canada, China, South Korea, Brazil, Japan, Netherlands, and the UK.
As US companies sell into global markets, they increase volumes and revenues as well as employment opportunities. Imports include not only consumer products but also inputs to the production of other goods. Trade enhances quality of life and growth potential. The logistics jam and related delays have caused disruptions to this multi-trillion-dollar flow. However, the data indicate that the volumes are trending decidedly upward, and the issues which have plagued international commerce are being resolved. This outcome is both excellent and essential. Stay safe!