Because no one asked for them, this week we’ll take a look at some foreign trade statistics, with specific attention to Indiana. At the national level, some pundits pontificate about the danger to our economy because the value of imported goods exceeded the value of goods we export.
“This can’t go on,” we are told. Yet it does.
“American jobs are being sent abroad by our failure to buy products made in America.” Yet no one ostracizes those who transport and sell foreign-made goods. Who refuses to buy underwear made in foreign lands?
In 2017, the U.S. exported $1.1 trillion of manufactured goods. At the same time, we imported $2.0 trillion worth of manufactured goods. We sold passenger and military airplanes to customers all over the world, while carrying home cellphones and TV sets in cars, SUVs and pickup trucks assembled in this country from foreign-made parts.
For every dollar of manufactured goods we exported as a nation, we imported $1.85 of goods from elsewhere. Little Rhode Island led all states with $5.61 of imports for each dollar of goods exported. By contrast, Wyoming, where coal is more plentiful than consumers, imported just 38 cents of goods for each dollar of exports. Indiana, 20th of the 41 net importer of goods, sent $1.54 abroad for each dollar received in goods exported.
Washington State, home to Boeing, led the nine states where exports exceeded imports. Behind the $21.2 billion surplus of Washington was Louisiana’s $15 billion trade surplus in manufactured goods (largely refined petroleum products). Indiana contributed $17.9 billion to the trade deficit, about as much as North Carolina, yet far from the $289 billion deficit of California.
As you might expect, Indiana’s foreign trade, in both directions, was dominated by two major sectors: health-related products and vehicle parts. For example, engine gear boxes were near the top of both our exports ($2.3 billion) and imports ($1.7 billion). Likewise, Indiana shipped medications worth $3.5 billion and received $1.5 billion worth from abroad.
One-third of Hoosier exports, by value, went to Canada with an additional 13 percent headed to Mexico. Four countries — China, Ireland, Canada and Japan — sent 56 percent of Hoosier imports.
With Canada, Indiana enjoyed a $5.2 billion trade surplus. We also had positive trade balances with Italy, the Netherlands, Australia, Mexico, the United Kingdom and Spain. In contrast, our trade deficit with Ireland was $7.3 billion, China $6.8 billion, Japan $3.8 billion, Germany $1.7 billion and Switzerland $1.2 billion. In some cases these trade imbalances result because American firms have manufacturing operations abroad that are, nonetheless, targeted on sales to U.S. consumers. But does anyone talk about tariffs on goods produced in Ireland?
Now you know there is more to Indiana’s trade than steel and aluminum. Hoosier businesses and jobs are not as narrowly focused as the minds of our foremost political leaders.
Morton Marcus is an economist, formerly with the Indiana University Kelley School of Business. Send comments to [email protected]