PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Trade Data: Growth Continued into January

By at 6 March, 2021, 10:42 am

by Raymond J. Keating-

International trade matters. It matters to the overall U.S. economy. It matters to consumers. It matters to small businesses. And it matters to U.S. workers.

From a business standpoint – ranging from small to large firms – quite simply, expanding exports are expanding opportunities, and since practically all imports are inputs to domestic businesses, expanding imports signal an expanding U.S. economy. And for good measure, according to the International Trade Administration, 98 percent of U.S. exporters are small and mid-size businesses, as are 97 percent of importers.

As noted in the new “U.S. International Trade in Goods and Services” report from the Bureau of Economic Analysis, both exports and imports grew in January 2021. That marks eighth straight month of growth for both exports and imports. And that, of course, is welcome news.

Of course, U.S. trade still faces a long road back. In fact, the road is steeper on trade given that both exports and imports actually started to hit the skids in 2018 – prior to the pandemic striking. And then once COVID-19 took hold, both exports and imports plunged. (See the following two charts.)

Source: Federal Reserve Bank of St. Louis, FRED

Source: Federal Reserve Bank of St. Louis, FRED

As the economy in the U.S. and around the globe works to recover from this pandemic, we will experience growth in trade, which in turn will feed further growth. But more will be needed. Specifically, the U.S. will need to return to its global leadership role as a beacon for free trade. In the end, reducing governmental barriers – such as tariffs and quotas – to trade means expanding incentives and abilities for entrepreneurs, businesses and workers to create and capitalize on opportunities, while consumers benefit from greater competition and choices. Trade truly is an economic win-win.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

 

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