U.S. Imports, Including Top Categories, Challenges, and Opportunities
Love Imported Goods, But Hate Losing American Jobs?
The United States imported $2.9 trillion in 2017. That includes $2.4 trillion in goods and $534 billion in services.
America is the world's largest importer. Its imports vastly exceed those of second-place China, importing $1.731 trillion, and the European Union, which imports $1.727 trillion. Combined, these countries import $5.8 trillion, or one-third of the world's total imports of $15.34 trillion. They’re the world's best customers.
Top U.S. Imports
The largest U.S. import category is capital goods at $641 billion. Businesses import $128 billion in telecommunications and semiconductors. They also import $128 billion in computers and related equipment.
Consumer goods is almost as large, at $602 billion. Most of this is cell phones and TVs ($132 billion). Next is apparel and footwear ($124 billion) and pharmaceutical preparations ($110 billion).
U.S. manufacturers import $508 billion of industrial supplies. Of this, $183 billion is oil and petroleum products. The United States also imports $359 billion worth of automobiles and $138 billion in food.
Services is a large and growing category. In 2017, U.S. service imports totaled $534 billion. Almost half was travel and transportation services, at $236 billion. The next was computer services and other business services, at $141 billion. Finance and insurance services were $76 billion. Government services was $21 billion.
Blame Imports for the Trade Deficit
The United States imports more than it exports. That's despite being the third-largest exporter in the world. The biggest exporters are the European Union and China. That creates a trade deficit of $566 billion. Even though America exports billions in oil, consumer goods and automotive products, it imports even more of those same categories.
Low-Cost Imports Cost U.S. Jobs
Everything that is imported is obviously not made in America. For that reason, it creates U.S. unemployment.
The biggest change occurred with the growth of imports from China. In 2007, 28 percent of all imports were from China and other low-income countries. This was a dramatic rise from 2000, when this value was only 15 percent.
At the same time, the United States was losing manufacturing jobs according to a study in the American Economic Review. It found that in 2000, more than 10 percent of the labor force worked in manufacturing. By 2007, it had dropped to 8.7 percent. Not all of these losses were from outsourcing. Some were from the rise in robotics.
The study also found that job losses hit some communities harder than others. The cities and towns that lost out to Chinese competition also experienced higher costs for unemployment compensation, disability payments, health care and early retirement. A study by Illinois Wesleyan University showed that $1 billion in imports from China reduced U.S. manufacturing by 0.48 percent.
At the same time, imports do create U.S. jobs in transportation, distribution, and marketing. For example, the Heritage Foundation estimated that imports from China created 500,000 of these jobs. But it's unlikely that these job gains offset the job losses in manufacturing.
Why America Imports So Much
Although America CAN produce all it needs, China, Mexico, and other emerging market countries can produce it for less. Their cost of living is lower, which allows them to pay their workers less. That makes them better at producing what U.S. consumers want than American companies are. This is called the theory of comparative advantage.
For example, Indian technology companies can pay their workers just $7,000 a year, much lower than the U.S. minimum wage. In other words, there's trade-off between plentiful U.S. jobs and low-cost products. That's just one of the ways IT outsourcing affects the economy.
Many people say we should only buy items that are "Made in America." That would solve the problem only if everyone were willing to pay higher prices.
President Trump wants to force Americans to make this trade-off. He has threatened China and Mexico with higher tariffs on their imports. He has pulled the United States out of the Trans-Pacific Partnership and threatens to do the same with the North American Free Trade Agreement.
If Trump dumps NAFTA, it may create more U.S. manufacturing jobs but raise the price of many imports. Those higher costs may in turn put many U.S. companies out of business.
How the U.S. Imports Are Part of the Balance of Payments
- Current Account
- Capital Account
- Financial Account