Senior Vice President for International Policy
October 07, 2022
What are the benefits of America’s trade agreements? As noted in part one of this series, the world is moving forward on trade, while Washington policymakers have been sitting on the sidelines.
In that context, it’s worth taking a moment to assess the benefits of trade for American workers, farmers, ranchers, and companies.
Those benefits are huge. More than 41 million Americans jobs depend on trade. Many of those jobs are highly dependent on U.S. exports of goods and services, which reached $2.5 trillion in 2021 (or about 12% of GDP), according to the U.S. Department of Commerce.
Trade is critical to the success of many sectors of the U.S. economy. Manufacturing is perhaps the most export-dependent sector of the economy, with exports topping $1.13 trillion in 2021. Meanwhile, U.S. manufacturing value-added in 2021 was $2.71 trillion, according to the U.S. Department of Commerce.
In other words, about 45% of everything American factories produce is destined for export markets — suggesting that about 6 million of the 12.8 million Americans employed in manufacturing owe their jobs to exports.
American manufacturers have been competing in global markets — and doing very well, thank you — for years. U.S. manufactured goods exports in 2020 were 3.55 times the levels seen three decades ago, according to data from the National Association of Manufacturers. The strong export performance of U.S. manufacturers was one factor allowing them to increase their output by 50% over the past 30 years in real terms.
American farmers and ranchers also depend on exports. About 25% of U.S. farm products by value are exported each year, according to the American Farm Bureau Federation. Agricultural exports are expected to reach nearly $200 billion in fiscal year 2023, according to USDA.
For many crops, such as wheat or almonds, more than half their harvest is sold abroad. U.S. farmers and ranchers are so productive there’s no way Americans could consume this bounty alone: The Farm Bureau estimates that one American farm produces enough food to feed 166 people annually — making exports essential to the prosperity of the U.S. farm and ranch economy.
U.S. exports of services are also booming, topping $767 billion in 2021 and achieving a trade surplus in services of $232 billion, according to the U.S. Department of Commerce. The United States is by far the world’s largest exporter of services, and America’s globally competitive service industries—including audiovisual, banking, energy services, express delivery, information technology, insurance, and telecommunications—benefit immensely from opportunities abroad.
The digital revolution has huge implications for services exports. Some two-thirds of business and professional services are now digitally tradeable, but relatively few companies in these fields have dipped their toes in the waters of trade. As explained in the U.S. Chamber’s recent report, The Digital Trade Revolution: How U.S. Workers and Companies Can Benefit from a Digital Trade Agreement, digital trade is creating opportunities for firms of all sizes and sectors.
Jobs tied to trade tend to be good jobs with high wages. According to Commerce Department research, manufacturing jobs tied to exports pay wages that average 18% higher than those that are not. Something similar holds for services jobs.
Trade is especially important to small businesses. More than 98% of the approximately 300,000 American companies that export are small and medium-sized businesses. They account for about one-third of U.S. merchandise exports.
While boosting U.S. exports is rightly drawing renewed attention in Washington, it is important to bear in mind that imports benefit Americans as well. Imports mean lower prices and more choices for American families as they try to stretch their budgets: Access to imports boosts the purchasing power of the average U.S. household by an impressive $18,000 annually.
Imports benefit business as well: Companies’ imports of raw materials, intermediate goods, and capital goods account for over half of all U.S. goods imports. Imports help U.S. manufacturers hone their competitive edge by lowering costs and allowing them to focus on the innovation and high value-added activities they do best.
The benefits of trade for the American economy are impressive. Negotiating strong reciprocal trade agreements can help American workers, farmers, and companies benefit even more.
Read more in our Lead On Trade Series:
- Why Americas Must Lead on Trade
- The Benefits of Trade Agreements in America
- How America's Small Businesses Benefit from Trade