THE ENTIRE POINT OF PROTECTIONISM IS TO MAKE THE ECONOMY LESS EFFICIENT:

Of the top 1 percent of exporters (around 2,000 firms):

90 percent import goods

36 percent are also among the top 1 percent of importer firms

account for 66 percent of US goods imports

employed almost 14 million people in 2007 (about the same as the entire manufacturing sector employed in the same year)

Of the top 1 percent of importers (around 1,300 firms):

96 percent export

53 percent are in the top 1 percent of exporters

account for 60 percent of US goods exports

employed almost 13 million people in 2007

Bernard, Jensen, Redding, and Schott (2016) (link is external) provide an explanation for the tight relationship between importing and exporting. First, it is costly for firms to start importing and exporting--effort and investments are required to start doing each. This implies that only the most productive firms will engage in importing or exporting.

Once a firm starts importing, it reduces the firm's costs and thus makes it possible to export. Similarly, exporting increases a firm's revenue and this makes it possible for the firm to import. These two aspects of firm behavior are intertwined and both would be damaged by higher tariff costs. 

In a world with these types of interdependent firm decisions, small decreases in trade costs (such as reductions in tariffs) can have magnified effects on trade flows, as they induce firms to serve more markets, export more products to each market, export more of each product, source intermediate inputs from more countries, and import more of each intermediate input from each source country.

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