WHAT DOES A NATION TRADE?

A nation exports those items in which
it has a comparative advantage-those items
which it makes better or more cheaply than
another country. The comparative advan-
tage may be due to superior natural resources,
labor skills, capital investment, or manufac-
turing techniques. For instance, because of
our mass-production industries the United
States has an advantage in manufacturing
tractors, trucks, earth-moving equipment, and
oilfield machinery and equipment. These,
then, are among our exports.

On the other hand, a country imports
those items for which it has a comparative
disadvantage, that is, items which it can
acquire more cheaply from abroad than at
home. For instance, because of our climate,

soil, and terrain, crops such as bananas,
coffee, and cocoa would be comparatively
expensive to grow in the United States. We,
therefore, buy such items from the countries
which are able to specialize in them because
their climate, soil, and terrain are more
favorable.

In short, a country specializes in those
pursuits in which it is most capable. It
exchanges what it makes best for that which
other nations make better or at less cost.

HOW IMPORTANT IS FOREIGN TRADE TO
THE UNITED STATES?

American economic and military strength
is vitally dependent on foreign trade. We
could not possibly maintain our high levels
of production and our standard of living

without imported raw materials. In addi-
tion, foreign trade supplies millions of jobs,
provides markets for 15 percent of our total
farm production, and accounts for sizable
portions of our industrial sales.

Imports

• Well over a million Americans owe
their jobs to the transportation, distribution,
or processing of imported goods.

• Raw materials from abroad are neces-
sary to keep our industries running at capac-
ity-we could not produce automobiles with-
out imported manganese, which is used in
making steel. Imports also supply many of
the materials necessary to our national secu-
rity, such as bauxite to produce aluminum
for airplanes.

• The United States depends on imports
for all or part of about 30 of the 39 minerals
vital to our industries. We import all our
industrial diamonds and tin and 90 percent or
more of our ferromanganese, platinum metal,
mica, manganese ore, antimony, cobalt, and
chrome ore. In addition, we buy from abroad
84 percent of the bauxite, 59 percent of the
lead, and 55 percent of the zinc we need for our
industries. (See chart, p. 6.)

Some of the services essential to our
way of life depend heavily on imports. In
the field of communications, for instance, we
need about 48 imported materials from at
least 18 free-world countries to make a tele-
phone, and our newspapers buy three-fourths
of their newsprint from abroad.

5

• Imports are our only source of some
foods; several prime examples are coffee, tea,
cocoa, and bananas. Imports also furnish an
important part of our supply of such foods
as sugar, spices, olives, canned crabmeat, and
tuna.

• Imports of finished goods offer Amer-
icans a wider range of choice and help keep
prices at reasonable levels through competi-
tion.

• Without imports we would hardly have
exports. Foreign countries could not buy
our goods if they did not first earn dollars
by selling to us.

Exports

• Foreign trade is crucial to U.S. ag-
riculture. About one acre of every six of
harvested cropland produces goods for for-

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