Much of the discussion about trade and imports is based on discussions about the products and sectors of the economy. However, among researchers studying international trade, major changes focus on relatively small companies that are directly involved in international trade. Many of these companies are found to be both major importers and major exporters. In fact, they add economic value to the US economy while planning to import intermediate goods in sequence as part of the global supply chain and export the finished (or more refined) products. Tariff debates take on a different taste, given what US companies involved in international trade actually do.
Polantràs offers a great overview of Cheer studying his fBBVA Lecture 2024: “Unknown seas of international trade” It was offered at the European Economic Association’s annual general meeting and is currently European Economic Association Journal (February 2025, pp. 1-51). International trade researchers are particularly interested in “unknown waters” for future theoretical and empirical research as explained by Anthra. Here we will focus on looking back at the “bases of the chart” of important facts discovered by Reseach in the last decade or two.
(I recommend posts from a few years ago, as this series of research has begun. Andrew B. Bernard, J. Bradford Jensen, Stephen J. Redding, Peter K. Schott, “International Trade Company.” From the Summer 2007 issue Journal of Economic Perspectiveswhere I work as an editor administrator. )
This is antràs with some fact that only a small share of US companies is involved in exports.
First, … in the real world, most exporting companies targeting a small number of markets are only a few of the companies engaged in exporting. … [O]35% of all US manufacturers were exported in 2007. Furthermore, this is not driven by universal exports in some sectors or zero exports in competing sectors. The highest share of companies among “computer and electronic products” companies reaches 75% of export participation, which is less positive than 50% in most sectors.
Second, the distribution of exporters is very skewed. Despite accounting for only 0.03% of all US manufacturers, the top 1% of exporters accounts for a staggering 80.9% of US manufacturing exports. The top 2%-5% and top 5%-10% accounted for 12.1% and 3.3% respectively, leaving a contribution of the bottom 90% with just 3.7% of the total US exports. This phenomenon is nothing special for the United States. The top 1% of exporters accounted for 77% of Hungary exports, 68% of French exports, 59% of German exports, 53% of Norwegian exports, 51% of Belgian exports, 48% of Belgian exports, 42% of Denmark exports, and 47% of Itai and Germany exports. Otaviano 2008; Why is there a concentration of concentrated exports among a small number of companies, even in the most competitive sector of the economy?
The third stylized fact revealed by empirical research in the late 1990s is that… exporters appear systematically different from non-food. They are larger, productive, and operate with a higher physical capital and skill strength. … [T]The differences between these are very large. US exporters average 1.11 points (or 203%) in terms of employment than non-approvers in the same sector, and even managing the number of employees, exporters have sales, labor productivity, total factor productivity (TFP), wages, capital strength, and skill strength.
A similar pattern occurs in imports. In other words, a relatively small share of companies accounts for a very large share of imports. Most of this transaction involves input into finished products.
Perhaps most notably, the majority of global trade is not finished. It is estimated that trade in interim inputs accounts for two-thirds of global trade (Johnson and Noguera 2012). This means that global companies import as well as export. …More specifically, US importers are minority, and the distribution of US imports is as skewed as exporters, but importers are larger, productive, and more capital and skill concentration than non-importers.
In fact, in many cases, imports and exports take place within a single company. That is, companies own overseas suppliers and imports from them, and overseas distributors and exports. “Using newly merged data on exports and imports of US companies, ANTRàset al. manufactures goods both in the US and abroad using a global production location in 2007.”
The current high-drama agenda of threatening tariffs is then negotiated and threatened again after retreating, and everything becomes a lively headline and talk show. Yes, after at least a few years of transition, perhaps more than a decade, some of these companies importing into export ports, have been able to rely much more on the domestic supply chain to reinvent their production processes. But don’t forget that these importing companies have evolved this way. Because it’s more cost-effective for them to do so. That is, because there was profit from trade. These companies are purchasing inputs in the global market as the products are either not available in the US market or are only available at a fairly high price. Similarly, we export because the global market has the demand needed to absorb the amount produced.
These large US companies often fall within the structure of the company itself. It is often one of the crown jewels of the US economy. “Sales, Labor Productivity, Total Factor Productivity (TFP), wages, capital strength, and skill strength” are well above the average. For these types of businesses representing the majority of US trade, the issue with tariffs is not whether families can afford to buy toys or t-shirts for their children. If these companies face a significant higher level of both importing inputs for production and importing retaliatory tariffs on exports, the policy cuts hearts from the business model.
