Facts About
Modern Manufacturing
The Trade Gap Widens for Manufacturers
Trade has been rising faster than the overall economy for decades. Just a dozen years ago, imports made up about 31% of domestic consumption—they are now 39%. Exports’ share of non-duplicative output has also edged up.
The reasons for this rising trade intensity remain unchanged from those of centuries past. Manufacturing stays highly productive while merchandise commerce becomes more cost-effective over time. For example, advances in intermodal shipping allow goods to move quickly and inexpensively around the globe. Cross-border manufacturing and sourcing bring the production process closer to the ultimate consumer, meaning that the variety of products offered increases while prices tend to decline relative to products not traded across borders.
Movements in exchange rates shape trade direction in the short term. For example, the past decade’s steady rise in the percentage of domestic production that was sold abroad can be traced to trends in exchange rates. From 2003 until 2013, the dollar depreciated 18% and the share of manufacturing production exported rose from 20% to 26%.