How AI Boosts International Trade

Key Takeaways

• AI imports grew 73% YoY through Jan 2026, outpacing overall imports
• Taiwan and Mexico each supply about 25% of U.S. AI product imports
• AI goods now 23% of U.S. imports, up from 15% in 2023
• WTO forecasts AI could lift global trade 34‑37% by 2040
• AI imports surge avoided, 2025 U.S. trade deficit $200 bn lower

Pulse Analysis

The Minneapolis Federal Reserve’s latest working paper reveals that AI‑related imports have become a dominant force in U.S. trade. By leveraging a large‑language model to map the Harmonized System codes, researchers identified a broad basket of products—from GPUs to specialized cooling systems—directly tied to AI development. This basket’s share of total imports jumped from 15% in 2023 to 23% in 2025, with a 73% surge in the most recent year, dwarfing the modest 3% rise in non‑AI goods. The data underscores how rapidly evolving technology can reshape trade patterns even amid tariff pressures.

Supply‑chain dynamics further illuminate the shift. Taiwan, long a hub for semiconductors, accounts for roughly a quarter of AI‑related imports, while Mexico unexpectedly matches that share by providing both hardware and ancillary components such as power and HVAC equipment. Notably, many of these items are exempt from the tariffs imposed during the Trump administration, suggesting that tariff policy has been selectively applied when strategic technology is at stake. The result is a trade deficit that, according to the Fed’s calculations, would be about $200 billion smaller in 2025 without the AI import boom, highlighting the fiscal trade‑off between protectionism and technological advancement.

Looking beyond the United States, the World Trade Organization’s 2025 report projects AI could boost global trade by 34‑37% by 2040, driven by lower transaction costs, higher productivity, and the high tradability of AI services. Historical parallels, such as the surge in trade during the late‑19th‑century globalization wave despite high tariffs, suggest that transformative technologies can override protectionist trends. Policymakers therefore face a dilemma: fostering AI‑driven growth may require rethinking traditional trade‑deficit narratives and embracing a more nuanced tariff strategy that balances domestic industry goals with the broader economic gains of open, technology‑focused trade.