The United States, home to less than 5% of the world’s population, stands as the global leader in economic power and trade. Since the end of World War II, the nation has championed the cause of open markets and expanded trade, a strategy that has been instrumental in driving American prosperity. The Peterson Institute for International Economics highlights that trade liberalization efforts have raised American real incomes by a staggering 9%, equating to an additional $1.5 trillion in income in 2013.
This economic boost stems from various factors. By expanding the production of America’s most competitive industries through exports, the nation raises incomes and enhances the productivity of the average worker. Serving a global market encourages investment in export sectors, leading to economies of scale and lower production costs. Imports, on the other hand, increase consumer choice, keep prices low, and provide high-quality inputs for American businesses, helping them remain competitive both domestically and internationally.
The Unrealized Potential of Global Trade
The economic gains from trade for the United States are far from exhausted. With roughly three-quarters of world purchasing power and over 95% of world consumers outside America’s borders, there is immense potential for further growth. The Peterson Institute estimates that the elimination of remaining global trade barriers could increase the benefits America enjoys from trade by another 50%. This underscores the critical role of trade as an engine of growth for the nation.
As the world continues to recover from economic downturns, the restoration of trade expansion plays a pivotal role. Over the past five and a quarter years of recovery, from the second quarter of 2009 to the third quarter of 2014, U.S. real GDP grew at an annual rate of 2.3%, with exports contributing one-third of this growth. Jobs supported by U.S. exports of goods and services increased by an estimated 1.6 million since 2009, reaching 11.3 million in 2013.
The Long-Term Benefits of Expanded Trade
International trade, despite its current unpopularity in some circles, has been a significant boon to the US economy. Since 1950, gains from trade, facilitated by improved transportation and communications, have added up to $2.6 trillion in 2026, lifting US GDP by 10%. These gains averaged $7,800 per person and $19,500 per household in the United States in 2026. However, trade barriers erected under former president Donald Trump and continued under the Biden administration, spurred by concerns over trade-related job loss, have slowed globalization.
While trade has inflicted losses on certain US workers, with more than 300,000 workers annually losing or switching jobs due to imports between 2001 and, the Americans enjoy large but less visible gains from trade through cheaper and more varied products and increased productivity at firms. Instead of restricting trade, US policymakers should focus on better safety nets for displaced workers and ensuring that economic growth is more widely shared.
