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Explaining ins, outs of imports, exports


January 07, 2009
In the context of a global economy, it's clear that trade is what makes the world go 'round, but have you ever stopped to think just what it is the United States trades? Which products carry the brand "Made in the U.S.A." nowadays and where do they end up? And, more importantly, just what are the numbers behind this trade imbalance that creates bi-weekly headlines for the Wall Street Journal?

The national numbers for trade are staggering. In 2007, the total value in exports from the United States was $1.16 trillion. The breakdown of top 10 merchandise categories for that year is as follows: nuclear reactors, boilers, machinery, etc., $198 billion; electric machinery, sound equipment, TV equipment, $148 billion; vehicles (except railway or tramway) and parts, $106 billion; aircraft and spacecraft, $75 billion; optic, photo, medical or surgical instruments, $66 billion; plastics, $47 billion; mineral fuel, oil etc., $42 billion; precious metals, stones, pearls, etc., $40 billion; organic chemicals, $37 billion; and special classification provisions, $33 billion.

These numbers look good until the total value of the 2007 imports into the United States is considered. That number was $1.95 trillion with these top 10 merchandise categories contributing to the bill: mineral fuel, oil etc., $360 billion; nuclear reactors, boilers, machinery, etc., $250 billion; electric machinery, sound equipment, TV equipment, $248 billion; vehicles (except railway or tramway) $214 billion; optic, photo, medical or surgical instruments, $53 billion; pharmaceutical products, $48 billion; precious metals, stones, pearls, etc., $47 billion; organic chemicals, $45 billion; furniture, bedding, lamps, etc., $40 billion; and special classification provisions, $39 billion.

Looking at the total numbers for 2007 alone, there is an $800 billion deficit in trade. In addition, eight of the 10 categories appear in both the export and import columns, and in every case the import number was higher. While it may seem counterintuitive to export a product and then import the same product at a higher price, this is a measure of value only, not volume. This means that the United States could be exporting a fewer number of high value goods for a larger number of lower value goods or vice versa. One also has to consider consumer demand for certain brands that may not be of U.S. origin. Still, an $800 billion deficit is a hard pill to swallow considering there was a relatively equal trade balance just 11 years ago.

As for where specifically all the country's products go, its NAFTA partners, Canada and Mexico, are the top recipients. The top five U.S. trade partners for 2007 ranked by total export value were Canada with $248 billion, Mexico with $136 billion, China with $65 billion, Japan with $62 billion and the United Kingdom with $50 billion.

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Illustration by Alisha Sonner
The United States likes to buy from its NAFTA partners, as well, but in 2007 the most it spent on imports came from China. The top five imports for 2007 were China with $321 billion, Canada with $317 billion, Mexico with $210 billion, Japan $145 billion and Germany with $94 billion. The top four countries in this category also make up the top four countries with which the United States has a trade deficit. China easily won that contest with the United States, owing it $223 billion for 2008 as of October.

But it's not all bad news. In Indiana, the trade picture is much brighter. According to a recent report released by the Indiana Business Research Center at Indiana University, Indiana exported $25.9 billion in goods in 2007. That is a 14-percent increase over 2006. This export growth has followed an 11-year trend for the state, where exports have risen from $11 billion in 1996 to $25.9 billion for 2007.

Indiana's top five export industries include: vehicle and parts (excluding railway), $6.5 billion; industrial machinery (including computers), $5.3 billion; electric machinery and electronics, $2 billion; pharmaceutical products, $1.8 billion; and organic chemicals, $1.6 billion.

Pharmaceutical products is the fasting growing industry in Indiana with a 22.7-percent increase in exports from 2001 to 2007. Indiana was ranked third among states in pharmaceutical exports in 2007, with an export value of $1.8 billion. The top five export destinations for Indiana's pharmaceutical products were the United Kingdom, Germany, Canada, France and the Netherlands, respectively.

Not only does Indiana excel at exporting, it depends on it. In 2006, Indiana ranked eighth among the 50 states for ratio of exports to gross domestic product, with 10.5 percent of Indiana's GDP coming from exports alone.

Additionally, export sales in the vehicle manufacturing industry supported more than 27,000 jobs in 2006. That's almost one-fifth of the total manufacturing workforce.

In Crawford County in 2007, manufacturing, at 17.9 percent, accounted for the highest percentage of jobs in the county.

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