PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

October 2021 Trade Data: Leadership Needed to Grow Trade and Economy

By at 7 December, 2021, 3:44 pm

by Raymond J. Keating –

The story on U.S. trade was generally positive for the month of October, according to the latest “U.S. International Trade in Goods and Services” report from the U.S. Bureau of Economic Analysis.

U.S. exports jumped in October versus September, increasing by 8.1 percent.

Unfortunately, this report does not offer a look at total (i.e., goods and services) exports in real dollars, but it does so with goods (which is roughly 78 percent of trade), and even with inflation running hot, real goods exports were up by better than nine percent.

As for imports, they were up slightly in October. However, focusing on real goods imports, there was a small decline in October versus September.

It’s important to keep in mind how important trade is to the U.S. economy, and to small business.

While back in 1955, for example, total trade (that is, exports plus imports) equaled only 6 percent of U.S. GDP, total trade expanded to 30 percent of GDP in 2014 and 27.5 percent in 2018, before falling to 26.4 percent in 2019 and 23.5 percent during the 2020.

Trump administration protectionist policies and the pandemic each took a toll on trade, and therefore on the overall U.S. economy. However, even the 2020 level of trade was four times larger than where trade stood as a share of the U.S. economy in the mid-1950s.

In addition, the international market is not solely about big business. In fact, 91.4 percent of U.S. exporters have fewer than 100 employees, and the same goes for 91.3 percent of U.S. importers.

Looking ahead, the U.S. needs to reclaim its leadership role in advancing free trade, for the sake of our own economy as well as the global economy. Unfortunately, the Biden administration has left Trump anti-trade policies largely in place, and recently added to them by doubling U.S. tariffs on soft lumber from Canada, adding to the already-considerable cost woes for the housing industry and for consumers.

Make no mistake, reducing governmental barriers to individuals and businesses trading would ease supply chain and inflation woes, while boosting opportunities for U.S. entrepreneurs, businesses and workers, and fueling economic growth.

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

 

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