The Economic Effects of Significant U.S. Import Restraints

This is the eighth update in the series of reports entitled The Economic Effects of Significant U.S. Import Restraints. Since 1989, when the U.S. International Trade Commission (Commission or USITC) began investigating this topic,1 U.S. import restraints have imposed increasingly smaller costs on the U.S. economy in terms of net economic welfare, output, employment, and trade. Estimates in this eighth update remain consistent with these trends. The current estimate of the total cost to U.S. consumers of all significant U.S. import restraints is approximately $1.1 billion per year, down sharply from $2.6 billion in the previous update in 2011.2 The estimated effects on specific U.S. sectors of removing the remaining restraints—a process known as “liberalization”—are also generally lower than in the seventh update. As in the previous update, this total cost estimate does not include the cost of significant restraints on services imports into the United States, which are difficult to quantify. However, although certain restraints remain in place, as noted in this report, the United States is one of the economies most open to services trade and is the world’s largest importer of services. At the same time, the United States is the world’s largest exporter of services and has the world’s largest services trade surplus. In fact, the United States’ strong domestic services sector accounts for the majority of U.S. economic activity, in terms of both value added and employment.3 A strong services economy can create unique opportunities for U.S. manufacturers, as they have access to high-quality and innovative business services that enable innovation and productivity. The role of services in U.S. manufacturing is the subject of this report’s special topic.4