How trade-dependent is the US economy?

Last year, the United States exported $258.2 billion worth of goods and services and imported $320 billion. Bureau of Economic Analysis. But despite those big numbers, the U.S. economy is more dependent on trade than many countries around the world.

A World Bank Analysis Using 2022 data, the U.S. trade-to-GDP ratio — the value of imports and exports as a percentage of the country’s gross domestic product — was 27%. By comparison, the global average is 63%.

„It gives you a kind of rough and ready sense of where a particular place stands relative to others,” said Peter Koglanis, director of the Institute for Global Research at the University of North Carolina at Chapel Hill, who has written about U.S. trade. GDP ratio for Conversation. „Now, the explanation is more complicated, though.”

Some places with high trade rates such as Singapore and Hong Kong serve as international trade hubs. Their small size compared to the volume of international goods moving through them means that trade constitutes a large percentage of their GDP.

„The story it tells is one of a mix,” said Nancy Chau, an economics professor at Cornell University.

The United States imports and exports hundreds of billions of dollars worth of goods and services annually, while producing goods that are consumed domestically. Compare that to a place like Hong Kong, where Chau grew up.

„We don’t produce anything, we’re a rock,” he said. „So to buy anything for consumption, Hong Kong has to import everything.”

Not only does America produce a wide range of goods and services — including agricultural products, financial services, and Hollywood movies — it also has many consumers.

Global business consultant Sarita Jackson helps businesses figure out how to expand internationally. While many U.S. businesses go through the process of finding the right markets, learning customs laws and shipping internationally, Jackson says some people decide, „Oh, well, maybe I’ll just stick with consumers here in the U.S.”

Some countries have low trade rates because they have high tariff restrictions or do not produce enough to export abroad. But not so in America.

Despite new tariffs imposed in recent years by President Joe Biden and former President Donald Trump, the US average import duty One of the lowest in the world.

The U.S. trade ratio is low „not because we’re poor or because we have the highest tariffs in the world,” said Kochlanis at UNC. „It is in some ways a function of our strength, our wealth, our diversity and our greatness.”