What are imports? Definition and meaning
The definition and meaning of Imports are goods or services of foreign origin that are brought into a country.
If you are an American citizen living in the USA and buy a car that is made in Japan, you and your country are the importers, while the Japanese car factory and Japan itself are the exporters.
The opposite of imports are exports – goods and services that people, companies or other entities make in their home country and sell abroad.
When a nation imports more than it exports it is said to have a trade deficit.
If exports are greater than imports it has a trade surplus. The USA and UK have for decades had large trade deficits, while Japan, China and Germany have enjoyed enormous trade surpluses.
Something is an import if it came in from abroad for sale, regardless how it arrived, it may have come by post, ship, car, truck, email, in the suitcase of a passenger, or even on the back of a load-bearing animal crossing the border.
Why do countries import?
There are many reasons why a country may import:
– Free Market: if a nation’s government and its people believe in a free-market economy, goods and services from abroad will be allowed to come in and compete against domestic providers.
Apart from boosting quality and price which results from healthy competition, consumers at home also enjoy a wide selection to choose from.
– Raw Materials: many countries, such as Japan, need raw materials for the products they make and sell at home and abroad. They need to import the raw materials to make those goods, because either they do not exist in their country or there is not enough.
– Not produced at home: many imports occur because the country does not produce a good or service. For example, Dubai imports virtually all its automobiles because it is unable to satisfy demand with domestic production.
– Monopolies: imports bring competition into a country where a monopoly exists for certain products or services.
Blocking imports bad for the economy
Sometimes smaller or younger domestic producers may complain about imports, arguing that they do not give them a chance to grow because the competition is too strong.
However, blocking trade in favor of national companies – protectionism – has been shown in the long run to undermine the overall economy. When protectionism sets in, trade wars ensue, unemployment eventually rises, and wealth creation diminishes.
The Venezuelan economy today is suffering from economic shrinkage, alarming shortages of basic items, nationwide power cuts, unemployment, and growing social unrest because its government has pursued a policy of protectionism and nationalization for over a decade.
The world’s greatest trading nations – with high relative exports and imports – are also the richest. Japan, Germany, the Netherlands, and Hong Kong have very high international trade volumes per head of the population, while those of Venezuela and Zimbabwe are comparatively low.
In international trade, imports and exports are limited by quotas and mandates from the customs authorities of each country.
The importing nation may impose a tariff – an international trade tax – on the products.
Some countries have special trade deals which specify what goods can be freely traded and which ones cannot.
There are several free-trade areas in the world where imports and exports by member states are limitless.
The 27 nations of the European Union can trade with each other freely – there are no tariffs or quotas. The same occurs within NAFTA (North American Free Trade Agreement), which consists of three member states – the USA, Canada and Mexico.
Types of importers
Worldwide, there are three main types of importers:
- – Those seeking out any product around the world to import and sell to a domestic consumer.
- – Those looking for sourcing abroad to get their products at the cheapest price possible.
- – Those that use foreign sourcing as part of their worldwide supply chain.
The term ‘Direct imports’ refers to buying products abroad directly from the producer, and thus bypassing the local supplier or ‘middle-man’. Major retailers like Wal-Mart in the USA and Tesco in the UK are large-scale direct importers.
Because the so-called ‘middle-man’ is taken out of the equation, the retailer is able to get its product at a lower price.
The USA is the world’s largest consumer of imports – the largest importer. In 2014, it imported $2,380,000,000,000’s worth of goods and services. China was the second-largest importer, followed (in order) by Germany, Japan, the UK, France, Hong Kong and South Korea.
In Latin America, Mexico (pop: 129 million) imports considerably more than Brazil (pop: 210 million). In 2014, Mexico imported goods and services to the value of $407.1 billion compared to Brazil’s $241.9 billion. The Mexican economy relies heavily in international trade, while Brazil’s is relatively protectionist.