The USA Is Not Very Import-Dependent

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"The USA Is Not Very Import-Dependent"

One response to my proposal to stimulate demand with a helicopter drop of money is the idea that the benefits will somehow all flow to Asia:

So, you give me an envelop full of cash, I go and buy a pair of shoes made in China, and a TV set made in Korea. That will certainly stimulate China and Korea; though it’s not quite clear to me what they are going to with that cash.

I think this reflects a widespread misunderstanding about the impact of trade on the United States economy. Not misunderstanding about the merits of trade even, just misunderstanding about the extent of trade. The United States is a very big country and consequently we’re actually a country that doesn’t trade all that much compared to most developed nations. You can see this if you look at imports as a share of GDP in the top ten economies (GDP calculated at market exchange rate levels here because we’re talking trade):

As you can see, we do less importing than ever country on this list except Japan and Brazil. Importing is an important part of American economic life, but it’s not that important. The vast majority of US demand for goods and services is met domestically and the United States is more reliant on the internal market to meet its demand than are China or Canada or Germany or what have you.

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