by Roc Armenter, Federal Reserve Bank of Philadelphia
Trade matters. International commerce accounts for almost one-fifth of the U.S. economy’s gross output. And by finding foreign markets for their goods, U.S. manufacturers provide jobs at home — even while competition from cheaper foreign goods may dampen domestic employment. Indeed, it is not a stretch to say that economics as a separate discipline was born from the observations of David Ricardo and Adam Smith on trade. But trade matters beyond its impact on national income. It affects domestic workers and firms that face foreign competition, and as a result, it is a recurrent topic of public discussion.