Why Is International Trade So Important to the United States and the World?

If you go back in history thousands and thousands of years, humans have always used trade as a form of currency and more. Fast-forward to today, and even with our sophisticated way of living, trade is still the backbone of America and the entire world. Small to medium-sized businesses know the importance of trade and utilize international trade finance companies to help them get the financial tools they need to trade with the world.


Top Three Areas Where Trade Can Have the Biggest Impact


Economic Growth

According to the U.S. Federal Reserve, American manufacturing has risen 80% in output over the past 2 ½ decades. Since 1947, US manufacturing has grown eightfold. These figures could not have been achieved without someone having a product, and someone having a need for that product—in other words, without the driving forces of trade in play.



In America today, statistics show that 41 million American jobs need trade as it’s a crucial piece to the business’ success. In developing countries, trade can be the difference between staying a developing country or developing into a booming country. With great trade comes more jobs for that country. With more jobs comes more economic growth.



According to the U.S. Department of Commerce, there are 300,000 small to medium-sized US businesses that are involved in importing and exporting. This number is three times what it was 20 years ago. Trade is not going away. It is only getting more fine-tuned and growing very rapidly.


Imports and Exports



The United States of America has maintained global competitiveness in recent years as a direct result of productivity gains in trade automation and information technologies. In 2016, the US reached $1.3 trillion in exported manufactured goods. That means about 60% of the US economy is based on exporting. The US Department of Commerce says that 6 million factory jobs are greatly supported by exporting manufactured goods to the world.



Even though the US economy exports 60% of its goods, they also depend on importing as well to reach other parts of the world. When strawberries and peaches are out of season in the US, they are booming in other countries that do not experience winters. The ability to buy imports increases purchasing power of an American household by nearly $20,000 per year. For businesses and their imports, this allows the US to bring in raw materials, intermediate goods, and capital goods, as well.


The U.S. Free Trade Agreements (FTAs) & NAFTA


Since the US has opened up free trade, there are statistics to show that the economy has boomed as a direct result. The FTA consists of about 20 countries. Altogether, these 20 countries only make up about 6% of the world population. However, these areas purchase almost half of the United States of America’s goods. This is a direct example of how smaller countries importing goods can optimize their purchasing power. It is also an example of how a small market can turn into a major market.


The North American Free Trade Agreement, or NAFTA, has greatly aided businesses of all sizes export their services, products, and goods around the world. In fact, Mexico and Canada are the United States of America’s two largest trading partners. Trade with these countries is made easier due to proximity to their borders, but nevertheless, these two countries alone help support trade with the US that has generated 14 million jobs for Americans. This trade relationship has also generated around $1.3 trillion per year in services, products, and goods.


Final Thoughts


As you can see, there are many benefits that trade has brought the USA and the world. Trade has been going on since the beginning of time, it isn’t going anywhere, and it is an integral part of the 21st century that we live in today. With trade, countries can infuse their economies with jobs and prosperity for years to come.


If you are a company that imports and exports and would like to keep benefiting from trade by not having any delays in your operations, we can help. Tradewind, a leading international trade finance company, can be your one-stop solution for all your international trade finance needs. If you’re looking for financing, credit protection, and collections packaged into a single trade finance facility, then Tradewind can provide what you need with their streamlined, flexible, and best-in-class services. Consult with them today for more information on how to expand your business to a global audience.

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