International trade is defined as the exchange of goods, services and capital between countries and regions. It has been a major driver in the growth of civilization over the past 100 years, helping nations to become more powerful forces in the global economy. America has a long history of trade agreements with nations all over the world and continues to be a key component of global trade today.
The importing and exporting of goods provides vital benefits for the U.S., including the:
- Extension of sales potential for existing products
- Enhancement of international trade technology
- Maintenance of cost competitiveness in the U.S. market
- The potential for business expansion, particularly for medium-sized businesses
- Competitiveness in the global marketplace
- Stabilization of seasonal markets
- Access to a greater variety of goods and raw materials
Trading Beyond Our Borders
The U.S. is the world’s largest exporter of goods and services, exporting over $2.3 trillion in 2014, according to the U.S. Department of Commerce. Over 38 million American jobs depend on trade, and with around 95% of the world’s population living outside of the U.S., there is an abundance of opportunity for the country in international trade, particularly in the manufacturing, services and agriculture industries.
Manufacturing has the greatest dependence on international trade, in which one in every four manufacturing jobs relies on exports. This has led to a doubling in output over the past 20 years, according to the U.S. Department of Commerce. Furthermore, through the growth of automation and information technologies, the U.S. has become more competitive in the global manufacturing marketplace.
The U.S. also remains the largest exporter of services, including energy services, financial services, express delivery, information technology, insurance and telecommunications. U.S. technology companies expect the export of services to grow in upcoming years, due to the increasing demand for technological services by middle-class populations in developing nations. In addition, the entertainment industry represents another major exporter, with U.S. music and film increasing in popularity around the world.
The U.S. Department of Agriculture reports that one of every three acres of American farms is dedicated to export markets, with the exportation of agricultural products increased to a record-breaking $152 billion in 2014. While the top destination for U.S. agricultural exports was once Canada, it has now been replaced by China. Other top destinations for U.S. agricultural exports include the European Union and Asia.
The agricultural commodities traded have also shifted in recent years, due to the rise in populations and incomes around the world, as well as diets, becoming more diversified. The demand for high-value agricultural products, such as meats, dairy products, poultry, live animals, fruits, vegetables, vegetable oils and beverages has increased over historically traded bulk commodities of wheat, rice, grains, cotton, oilseeds and tobacco.
The Benefits of Importing Goods and Services
While focusing on boosting U.S. exports is certainly important, imports also benefit the U.S. population. Imports bring lower prices and a greater diversity of choices to American consumers, including products that would otherwise be unavailable, such as fruits and agricultural items. In addition to the availability of all types of agricultural products, the U.S. relies on other countries for a continued supply of textiles and raw materials. Many U.S. companies depend on these imports in order to build more complex and ccutting-edgeproducts.
Free Trade Agreements
Free Trade Agreements (FTAs) play a prominent role in U.S. trade. The U.S. has free-trade agreements with twenty countries, which represent around 6% of the world population. According to the U.S. Department of Commerce, these agreements account for nearly half of all American exports. In addition, the U.S. has recorded a trade surplus in manufactured goods with FTA partner countries for each of the past five years. This is particularly relevant to medium-sized American companies, who represent one-third of U.S. merchandise exports.
International trade is a driving point of America’s economy, aiding consumers and businesses alike in today’s increasingly globalized world. As opportunities in international trade continue to develop across the globe, the U.S. can continue to expand its trade efforts and provide Americans easier access to desired goods and services.
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Benefits of International Trade, Economy Watch
The Benefits of International Trade, U.S. Chamber of Commerce