2022, U.S. exports of goods and services totaled $3 trillion and imports totaled $3.9 trillion. This overall trade benefits the economy. Sellers have access to global markets (ask the farmers!), buyers have better access to products at their preferred price and quality combinations, and competitive pressures on domestic producers increase, allowing them to perform better. Masu. But the benefits are not evenly distributed, and in some cases, workers in industries facing particularly strong competition from imports, for example, may suffer a complete loss.
What is the overall profit? How should we think about losses?
Gary Clyde Hufbauer Megan Hogan of the Peterson Institute for International Economics said,Since 1950, America's gains from global market participation amounted to approximately $2.6 trillion in 2022” (Policy Brief 23-17, December 2023).
To summarize the economic benefits of trade, Hufbauer and Hogan first point to a pre-2017 study of more than a dozen studies on international trade that „calculated an average 'dollar ratio' of 0.24.“ It is said that Those people write:
Simply put, the dollar ratio is the dollar increase in GDP divided by the dollar increase in two-way trade. In terms familiar to economists, the dollar ratio is the elasticity of income (GDP) to trade. Stated another way, this calculation shows that a 1% increase in trade increases GDP by 0.24%. In other words, a $1 billion increase in two-way trade increases GDP by $240 million.
They redid and updated these calculations based on a newer wave of research, suggesting an updated „dollar ratio“ of 0.30, or that a $1 billion increase in two-way trade would increase GDP by $300 million. I am.
What happens to those who suffer losses in trade? Mr. Hufbauer and Mr. Hogan essentially offer his two answers. One response is to put the number of people suffering in trade into the context of job departures in the U.S. economy as a whole. Ultimately, employers lose market share to domestic competitors and lose jobs, perhaps due to changes in consumer tastes, changes in the skill levels of workers that U.S. employers seek, or because: There are also workers. Average management. Other U.S. workers could also lose their jobs to automation and new technology. More workers are changing jobs for higher wages and better opportunities, especially if they feel their current employer may be in trouble. A second response is to argue that all U.S. workers who are laid off from their jobs are entitled to government assistance through unemployment insurance and other programs while they transition to new jobs. Those people write:
Compared to the estimated number of U.S. workers who lost their jobs or changed jobs due to increased imports (242,000 per year from 2019 to 2022), this means that approximately 50 million U.S. workers change jobs each year. A small proportion of these workers have been „laid off,“ or laid off, including a small number of people displaced by imported goods. Relocation reduces profits in the long run. Across the vast US economy over the past two decades, annual forced migration has ranged from less than 1% of the workforce to more than 3.5% (1 million to 5 million workers). All displaced workers, including those displaced by trade, should be provided with a better public safety net.
Of course, if you find these estimates of gains from trade hard to believe and would rather see a significant decline in international trade, take heart. Now is your time! The share of U.S. trade in goods and services as a percentage of GDP has declined since the Trump administration. However, international flows of data, information and foreign investment continue to increase. Although the form of globalization has changed, the technologies that drive more global connectivity continue to develop.