What is an import?

Like humans, countries also buy and sell things. When one country buys goods and services from another country, it is an “import” for the country that is buying them. Imports and exports are important elements of international trade. If the net balance of a country’s imports is bigger than its exports, then the country is in a trade deficit. If the balance of exports is bigger than imports then it is a trade surplus.

The of America (USA), the sole superpower, has been in a trade deficit since 1975.

Key Points of Import:

• An import is the goods and services produced abroad but bought in your native country;
• People prefer to buy foreign goods and services when domestic industries are unable to produce them efficiently.
• Countries often make free trade agreements with each other, making some goods and services less expensive;
• Economists disagree over the merits and demerits of imports

Why do countries import?

Countries often import goods and services because they are not produced as cheaply and efficiently compared to the exporting country. This is the main reason for imports. Countries also import raw materials and commodities that are not produced locally. For example, third-world countries like Bangladesh, India, and Pakistan import crude oil because they do not produce it. Free trade agreements and special tariff arrangements also decide which items are cheaper to import. With the onset of globalization and agreements with different countries, U.S. imports of goods and services grew from $580.14 billion in 1989 to $3.1 trillion in 2019.

What are the effects of imports?

Importing through free-trade agreements has negative effects as well. Goods and services are imported from countries where labor is inexpensive. It results in a loss of manufacturing jobs in the home country. However, free-trade agreements allow a country to import goods and services from cheaper production regions while reducing dependence on domestic industries.

How do experts disagree over imports?

Opinions about the need for imports are equally divided. Policymakers, especially economists, disagree on both the positives and negatives of import. Some say that continued dependence on imports destroys the demand for locally produced goods and services. It can negatively affect the development of entrepreneurship and domestic enterprises. Supporters say that imports enhance the living standard by providing consumers and customers alike with more choice and cheaper goods. In the short run, it prevents growth in inflation.

Real Examples of Imports:

The of America is the sole economic power in the world. The country’s top trading partners are Canada, Mexico, Germany, China, and Japan as of November 2020. In 1994, the US, Canada, and Mexico signed a free-trade agreement. It is called the North American Free Trade Agreement (NAFTA). Then it created one of the biggest free-trade zones in the world. With some exceptions, it permitted the free movement of goods, services, raw materials, and financial capital across the borders of these three nations.

Implications of NAFTA:

Statistics later showed that NAFTA has slashed automotive parts and vehicle production in the U.S. and Canada. Mexico emerged as the largest beneficiary of this agreement in this field. Mexico was blessed with cheap labor, much cheaper than the U.S. and Canada. It attracted the entrepreneurs of both countries to Mexico. As a result, the Mexican automotive sector grew rapidly.

USMCA replaces NAFTA:

Under the presidency of Donald Trump, the U.S. has started pushing for a new agreement to replace NAFTA. In 2018, the U.S., Canada, and Mexico signed a new deal. It was the -Mexico-Canada Agreement (USMCA). Its major impacts are:

• Automobile companies should make sure that 75% of their components are manufactured in one of three countries;
• Deciding a new minimum wage for the employees of the automobile industry and broadening labor union protections and strengthening sanctions for violations;
• Broadening the scope of intellectual property copyrights;
• Doing away with duties in digital music and literature;
• Providing American farmers with an entrée into Canada’s dairy industry is a priority.

The USMCA came into effect on July 1, 2020