# Import: Meaning, Benefits, Challenges, and Real-Life Examples

![Import: Selling products or services produced in another country.](https://www.investopedia.com/thmb/kGy7nvUc0kgBgkgJ1xTmA31YQyY=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/import.asp-FINAL-1-e3a8567badf34fdaaaca673427ddb9ca.png)

*— Investopedia / Joules Garcia*

> **Definition**
>
> An import is a product or service that is produced in one country and purchased in another, thus playing a role in international trade and affecting a country's balance of trade.

## What Is an Import?

An import is a good or service bought in one country that was produced in another. Imports are one component of a crucial [international trading](https://www.investopedia.com/insights/what-is-international-trade/) system, with exports serving as the other. Each component has an impact on a country's balance of trade, which is the difference between the amount imported and the amount exported.

Imports are an important part of economic activity due to geographical limitations, especially when domestic production using specific resources is not an option.

### Key Takeaways

*   An import is a product or service produced abroad and purchased domestically.
*   Countries import goods that can't be efficiently or cheaply produced domestically.
*   Free trade agreements often determine the cost-effectiveness of importing goods.
*   Economists debate imports' impact on domestic industries and job markets.
*   The US-Mexico-Canada Agreement (USMCA) impacts trade and labor across North America.

## The Fundamentals of Imports

Countries often import goods when [domestic industries](https://www.investopedia.com/ask/answers/042315/how-do-tariffs-protect-domestic-industries.asp) can't produce as efficiently or cheaply as foreign ones. They may also import raw materials or [commodities](https://www.investopedia.com/terms/c/commodity.asp) unavailable domestically. For example, many countries import oil because they cannot produce it domestically or cannot produce enough to meet demand.

Free trade agreements and tariffs often determine which imports are cheaper. Due to [globalization](https://www.investopedia.com/terms/g/globalization.asp) and more free-trade agreements, [U.S. imports](https://www.investopedia.com/us-imports-by-country-11731280) jumped from $580.14 billion in 1989 to $3.1 trillion in 2019.

[Free-trade](https://www.investopedia.com/terms/f/free-trade.asp) deals and reliance on cheaper imports contribute to manufacturing job losses in importing nations. Free trade opens the ability to import goods and materials from cheaper production zones and reduces reliance on domestic goods. The impact on manufacturing jobs was evident between 2000 and 2007, and it was further exacerbated by the Great Recession and the slow recovery afterward.

## The Debate Over the Impact of Imports

Economists and policy analysts debate the pros and cons of imports. Some critics argue that continued reliance on imports means reduced demand for products manufactured domestically, and thus can hobble entrepreneurship and the development of business ventures. Proponents say imports enhance the quality of life by providing consumers with greater choice and cheaper goods; the availability of these cheaper goods also helps to prevent rampant inflation.

## Real-World Examples and Implications of Imports

The United States' top trading partners, in November 2020, included China, Canada, Mexico, Japan, and Germany. Two of these countries were involved in the [North American Free Trade Agreement](https://www.investopedia.com/terms/n/nafta.asp) (NAFTA) that was implemented in 1994 and, at the time, created one of the largest free-trade zones in the world. With very few exceptions, this allowed the free movement of goods and materials between the United States, Canada, and Mexico.

> **Important**
>
> The United States has experienced a continuous trade deficit since 1975.﻿﻿

It is widely believed NAFTA has reduced automotive parts and vehicle manufacturing in the United States and Canada, with Mexico being the main beneficiary of the agreement within this sector. The [cost of labor](https://www.investopedia.com/terms/c/cost-of-labor.asp) in Mexico is much cheaper than in the United States or Canada, pushing automakers to relocate their factories "south of the border."

### $16

The minimum hourly wage paid to autoworkers for certain cars under a trade agreement signed between the U.S., Canada and Mexico.

In 2018, the U.S., Canada, and Mexico agreed to replace NAFTA with the [United States–Mexico–Canada Agreement](https://www.investopedia.com/usmca-4582387) (USMCA). Its highlights include:

*   Requiring automobiles to have 75% of their components made in one of the three member nations
*   Setting a minimum wage for autoworkers and extending union protections and sanctions for labor violations
*   Extending intellectual property copyrights and prohibiting duties on digital music and literature
*   Giving the U.S. farmers access to Canada's dairy market

The USMCA took effect on July 1, 2020.

## The Bottom Line

Imports serve an essential function in international trade because most countries are limited in what they can produce. Imports help economies become more efficient because they can focus on the products and services they are best at and have the resources for, and which have lower opportunity costs. Economists believe that countries should focus on exporting more than they import to avoid relying on other countries for many products and to achieve a positive trade balance.

There are mixed perceptions on the effect imports have on an economy. Some believe that potential economic benefits like consumer savings and choice outweigh concerns about relying on other countries. Others are concerned about domestic job losses and industrial decline as imports increase and exports decrease.  

> **Article Sources**
>
> 1.  U.S. Census Bureau. "[U.S. Trade in Goods and Services - Balance of Payments (BOP) Basis](https://www.census.gov/foreign-trade/statistics/historical/gands.pdf)," Page 1.
>     
> 2.  Federal Reserve Bank of St. Louis. "[All Employees, Manufacturing](https://fred.stlouisfed.org/series/MANEMP)."
>     
> 3.  U.S. Census Bureau. "[Top Trading Partners - November 2020](https://www.census.gov/foreign-trade/statistics/highlights/top/top2011yr.html)."
>     
> 4.  U.S. Customs and Border Protection. "[North American Free Trade Agreement](https://www.cbp.gov/trade/nafta)."
>     
> 5.  Office of the United States Trade Representative. "[USMCA Facet Sheet: Autos and Auto Parts](https://ustr.gov/sites/default/files/files/Press/fs/USMCA/USMCA-Autos_and_Auto_Parts.pdf)," Page 1.
>     
> 6.  Office of the United States Trade Representative. "[Joint Statement from United States Trade Representative Robert Lighthizer and Canadian Foreign Affairs Minister Chrystia Freeland](https://ustr.gov/about-us/policy-offices/press-office/press-releases/2018/september/joint-statement-united-states)."
>     
> 7.  Office of the United States Trade Representative. "[USMCA Fact Sheet: Intellectual Property](https://ustr.gov/sites/default/files/files/Press/fs/USMCA/USMCA_IP.pdf)," Page 1.
>     
> 8.  Office of the United States Trade Representative. "[USMCA Fact Sheet: Digital Trade](https://ustr.gov/sites/default/files/files/Press/fs/USMCA/USMCA-Digital_Trade.pdf)," Page 1.
>     
> 9.  Office of the United States Trade Representative. "[USMCA Fact Sheet: Agriculture Goods](https://ustr.gov/sites/default/files/files/Press/fs/USMCA/USMCA-Agriculture.pdf)," Page 1.
>     
> 10.  Office of the United States Trade Representative. "[United States-Mexico-Canada Agreement](https://ustr.gov/trade-agreements/free-trade-agreements/united-states-mexico-canada-agreement)."