Global Trade in Context: Which States Experience the Most International Trade Activity?

Recent developments in global trade and supply chains have renewed interest in understanding how international commerce affects state economies. Changes in trade flows, shifts in global supply chains, and geopolitical events can influence both imports and exports, which raises the questions: How can we understand the effect of short-term changes in import and export volume, and where is the bulk of this activity concentrated in the United States?

We often discuss the effects of these events on the national level; however, there are certain states that experience a higher reliance on exports and imports. We can gauge this by looking at the share of exports and imports relative to the total GDP of the state to get a sense of how relevant these goods are to the state’s economy and then look at the key sectors to see what businesses and products are most relevant.

Top 5 States: Imports & Exports Relative to GDP

Which States Have a Reliance on Imports?

While imports are technically a reduction to GDP, we can compare them to get a sense of how important these goods are to the overall affairs of a state. Imports often serve as raw materials used as an input to production for large industries, and price changes may influence the cost of doing business for these sectors and have secondary effects on the buyers of these products.

Initially, we can observe that multiple states in the top five are located in the Midwest and the South. The Midwest heavily imports goods, likely due to the prevalence of manufacturing in the region. Let’s examine the economies of these states to get a better idea of what is being imported:

• Indiana and Kentucky lead the charge with a significantly higher proportion of imported goods relative to the rest of the country. These states primarily import chemicals associated with pharmaceuticals and medicines.
• Illinois and Tennessee primarily import computer technology and electronics, supporting the substantial professional services demands of Chicago and Nashville.
• Michigan’s automotive manufacturing industry motivates imports of transportation goods and motor vehicle parts used to support car production.

Which States Lead in Exports?

A state that relies on exports as a significant part of its economy means that the key industries associated with the area tend to sell a large amount of goods to international customers.

Looking at the top five, we see something similar to imports. The South and Midwest are highly represented relative to other regions; however, the South broadly takes the lead due to its geographic location coupled with its prominence in oil, a frequently exported product due to the global market:

• Louisiana stands out with exports comprising nearly a third of GDP. And, as is the case with Texas and North Dakota, primarily exports oil, gas, petroleum and coal products. This is unsurprising considering the overall economies of these states coupled with the ports associated with Louisiana and Texas.
• Kentucky heavily relies on aerospace products as a sector of its economy, and this is reflected in the state’s exports.
• Indiana predominantly exports pharmaceuticals, consistent with its status as a life sciences hub and location of prominent firms such as Eli Lilly

Key Takeaways

While larger states such as California and New York experience comparable levels of exports and imports in terms of dollar volume, we looked at the proportion of activity relative to GDP to establish the state’s economic reliance on international trade for its core businesses. We found that Indiana and Kentucky depend on both exports and imports, and that the South and Midwest contain multiple key states for international trade.

The states discussed are likely to experience both positive and negative effects from fluctuations in global trade. A global shortage may bolster the export business of states that are equipped to supply key goods to international clients, while a rise in import costs may put downward pressure on profits or raise consumer prices.

Additional data, such as employment created by foreign-direct investment and primary trade partners, can inform the overall picture of international economic activity for a state. The degree to which a state is impacted by changes to the cost of imports and demand for exports depends heavily on its primary trade partners and their position in the global market. Moreover, some states see foreign businesses investing in physical assets that create jobs, signifying a long-term commitment to a state’s economy as a place of operation. Refer to the map filter below to see these trade statistics for each state:

Additional data for each state can be found in the State-by-State Indicators for Engaging in International Real Estate Transactions report here.