What trade means for U.S. communities

Key Concepts

• International trade is economically beneficial to the United States as a whole by providing:
  • U.S. consumers with a larger variety of foods and other products at lower prices,
  • U.S. companies and workers access to new markets,
  • U.S. companies access to supplies from nations that specialize in sectors not well represented in the United States, facilitating gains in efficiency and productivity, and
  • increased competition, which can hold down prices.
• But not all businesses or business sectors benefit equally from trade and some can be harmed, such as when U.S. companies and workers must compete with foreign businesses with lower labor costs or other advantages.

A Few Facts to Know

• Trade agreements do set the rules of international exchanges, but do not guarantee economic outcomes. That is, the economic effects of trade agreements are difficult to predict and intended results do not always occur.
• Tariffs are effectively taxes paid by U.S. companies on goods imported from foreign countries. Who ultimately bears the burden of tariffs depends on whether those companies absorb the added costs or pass them on to their customers.
• Increased automation in U.S. factories can make them price-competitive with factories in other countries that have lower labor costs. But automation reduces the need for U.S. workers, just as imports do.
• In some cases, trade issues get blamed for changes in the economy when other factors such as technological change are actually playing a larger role. In the 1980s, for example, it took ten man-hours to produce a ton of steel; today, in part from the introduction of U.S.-based mini-mills that can make steel in new and more efficient ways, it takes just over one man-hour. That has led to job losses that have nothing to do with competition from imports.

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