Is Importing Necessarily Tied to Exporting?
On March 21, 2025, economist Don Boudreaux shared an intriguing passage from a chapter penned by Veronique de Rugy on Café Hayek.
The passage reads as follows:
One of the biggest fallacies about trade is that the ultimate value of trade for a country is found in that country’s exports, with imports being valuable only insofar as they better enable the country to export. But in reality, the opposite is true: Imports are the end and exports are the means. If we could acquire imports without exporting anything, that would be the best of all worlds for us. Unfortunately, foreigners won’t work for us for free. They want things in return for what they produce for us, and so we must export.
Clearly, Don aligns with Veronique’s viewpoint. However, while I often find myself in agreement with both of them on trade matters, I must respectfully diverge here.
Let’s break this down, starting with the portion I do agree with—the first sentence:
One of the biggest fallacies about trade is that the ultimate value of trade for a country is found in that country’s exports, with imports being valuable only insofar as they better enable the country to export.
This statement is accurate and well-articulated.
Now, let’s dissect the rest of the argument, line by line:
But in reality, the opposite is true: Imports are the end and exports are the means.
This presents a binary view: both imports and exports hold significance. While we certainly desire imports, exporters have their own goals tied to exporting.
If we could acquire imports without exporting anything, that would be the best of all worlds for us.
It’s debatable whether a scenario where we could receive imports without any exports would be ideal. Exporters would likely disagree, as their profit hinges on international sales. Furthermore, what if the alternative to exporting was substantial foreign investment in our domestic economy? That could be a win-win situation, which we’ll elaborate on shortly.
Unfortunately, foreigners won’t work for us for free.
Agreed.
They want things in return for what they produce for us, and so we must export.
While it is indeed true that they require compensation for their goods, it does not logically necessitate that we must export. One pathway for them to acquire funds for purchasing our goods is through our imports, as they will utilize earnings from their exports to us (which are, in their context, imports) to buy our products.
Consider this: if we invest heavily in imports, is it mandatory for us to sell exports? Not necessarily. What if there are lucrative investment opportunities in the United States—not just in federal bonds but also in companies like Apple, Microsoft, or Meta? Additionally, there is a persistent global demand for U.S. dollars. Thus, exporters from other countries could choose to reinvest their earnings from exporting to us back into the U.S. or retain them as dollar reserves. This illustrates that while there is a strong empirical relationship between exports and imports, a strict dependency does not exist. Our substantial current account deficit alongside a notable capital account surplus stands as evidence of this dynamic.
The only scenario where Veronique’s assertion might hold is if no country engaged in cross-border investments. However, that is far from the reality we navigate today.
