As the U.S. and China wrestle over tariffs, public attention naturally focuses on manufacturing. But for years manufacturing’s share of global trade has been shrinking, while trade in services has been growing. The economy of the future will be leveraged on the exchange of knowledge and intellectual property. This should make commercial services sold via the internet central to any new U.S. trade agreements.
Today America is both the world’s largest exporter and importer of services. Not coincidentally, this sector of the global marketplace has the fewest barriers to competition. Services via the internet are unhindered by many of the obstacles to trade in manufactured goods—from geographic distance to national borders to limited economies of scale.