There is a myth that global trade hurts local business - that to support local companies, you can’t buy products from overseas. On the Global Banking team at First National Bank, we know different. Many small and midsized businesses (SMBs) throughout the U.S. rely on imported products and the exportation of their products to be successful.
In the old days, world trade was reserved for large, multinational companies. Today, e-commerce has made it possible for SMBs to sell their products via online stores or online marketplaces, like Amazon, to customers all over the world. For instance, companies with fewer than 500 employees accounted for 97.8 percent of all identified U.S. exporters, according to The McKinsey Globe Institute.
Many of the businesses you shop from on a regular basis rely on global trade. For example, more than 350,000 local coffee shops across the U.S depend on the import of over 178 million pounds of coffee per year, according to the U.S. Department of Commerce. Because of world trade, American farmers help feed the world – one in three acres of corn planted in the U.S. will be sold to another country, providing income for farmers across the nation.
By trading in the global marketplace, American companies are also more likely to succeed. According to a study published by the Institute for International Economics, U.S. companies that export not only grow faster, but they are nearly 8.5 percent less likely to go out of business than non-exporting companies. This is because more than 70 percent of the world’s purchasing power is outside of the U.S. Exporting goods allows businesses to serve new markets and potentially stay ahead of the competition. Imports can also be more affordable. When budgets are tight, every dollar counts.
So, why not buy everything from other U.S. companies? Why trade globally at all? Because thinking globally allows U.S. businesses to focus on their core competencies. Within your community, there are things people do really well, but you can’t do everything great. Global trade allows us to share what we excel at with the world, and benefit from the expertise and resources of other nations.
Additionally, global trade is good for the U.S. economy and employment rate. Each year, local businesses do more than $5.2 trillion dollars in trade with other countries, generating 41 million American jobs, according to the U.S. Department of Commerce.
First National Bank has a long history of supporting local businesses, and in the Global Banking team, we love working with companies to help them enter the global marketplace. When businesses want to go international, whether it’s importing new products or exporting to new markets, there can be a lot of confusion on where to start. There can also be a lot of risks involved when dealing internationally. We have advisors that have expertise on issues such as moving funds in and out of the country, managing foreign currency risk and tools such as letters of credit to reduce your credit risk. We use a consultative approach to understand your needs and add value where you may not have expertise. Learn more about our international banking solutions.
About the Author
Mike Salerno joined the bank in 2002 and currently leads the Global Banking team, which includes business development, international payments, foreign exchange management and trade finance solutions for corporate and correspondent banking customers. International issues can present challenges for organizations, and Mike enjoys creating simple and transparent solutions that reduce the complexity of doing business internationally.
The articles in this blog are for informational purposes only and not intended to provide specific advice or recommendations. When making decisions about your financial situation, consult a financial professional for advice. Articles are not regularly updated, and information may become outdated.