- Indeed, looking at trade as a percentage of gross domestic product – a metric economists sometimes call the “openness index” – the U.S. is one of the least trade-oriented nations in the world.
- In 2022, the U.S. trade-to-GDP ratio was 27%, according to the World Bank.
- That means the total value of U.S. imports and exports of goods and services combined equaled 27% of the country’s GDP.
- In fact, of the 193 countries examined by the World Bank, only two were less involved in international trade than the U.S. Those were Nigeria, at 26%, and Sudan at 3%.
Making sense of trade-to-GDP ratios
- It’s tricky because many factors can influence a trade-to-GDP ratio.
- Others, such as Turkmenistan, have low ratios because they’re geographically remote.
- On the other hand, extremely high ratios of well over 300% are found in a few tiny countries due to necessity, location or both.
- It’s also important to look at the trajectory of trade-to-GDP ratios over time.
How the US got here: A roller-coaster history of American trade policy
- But its low trade-to-GDP ratio and ideological commitment to anti-communist allies mitigated domestic political unrest around trade issues.
- That opened the world to increasingly fluid goods and capital transfers as encouraged under world trade agreements.
- The North American Free Trade Agreement of 1993 opened U.S. borders on the north and south to unprecedented transfers of capital, trade and migration.
- Then, in 2001, China gained “permanent normal trade relations status” with the U.S., thus smoothing its entry into the World Trade Organization.
- In both cases, the economic dynamism unleashed by the moves was accompanied by major job losses in American manufacturing.
- Critics were especially worried by the prospect of trade hurting American jobs and living standards.
- Rather, we’re likely to hear skepticism from both Biden and Trump when the subject of open trade comes up.
The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.
