Under pressure from US tariffs and geopolitical conflicts, US imports of most good and services has been fairly flat, but with one big exception: imports related to artificial intelligence. Michael Waugh of the Minneapolis Fed provides evidence in his working paper “Trade in AI-Related Products”(Minneapolis Fed Staff Report 684, April 8, 2026). Jeff Horwich, also from the Minneapolis Fed, provides a shorter and readable overview of the findings in “Much more than microchips: Trade soars in AI-related goods, driving U.S. trade deficit” (May 4, 2026).
As background, it’s useful to know that that all US imports are classified by what is called the Harmonized System, and the most detailed level of classification is called HS10. Waugh uses a large-language model to determine how closely linked different inputs are to the broader notion of what is needed to build AI. He explains:
What are AI-related products? The classification identifies the obvious computer hardware inputs such as data processing units and storage devices. These products account for about half of all AI-related trade and imports of them have grown by triple digits since 2023. But the classification also identifies a broader set of products tied to electrical infrastructure, networking, cooling and HVAC, and specialty materials. These ancillary products account for the other half of AI-related trade and have also experienced strong import growth.Through 2025, AI-related products account for 23 percent of all U.S. imports, up from 15 percent in 2023. Leading into the start of 2024, AI-related products grew no differently than non-AI-related products. But since early 2024, import growth in AI-related products has accelerated sharply. As of January 2026, trade in AI-related products had grown by 73 percent relative to 2023, compared with only 3 percent for non-AI-related products.
Where are these products coming from? Two countries play an important role in the sourcing of AI-related products. Not surprisingly, Taiwan is an important source for computer hardware components (e.g. semiconductors) and Taiwan accounts for about a quarter of imports of AI-related products. The surprising source is Mexico. It accounts for another quarter of AI-related trade and its reach extends to computer hardware and other products related to electrical power, networking, and cooling HVAC. China is less important in AI-related trade and its overall share has diminished over the past two years.
Here’s a figure to illustrate the pattern. The blue line shows AI-related imports to the US. The black line shows all imports. The red line show imports not related to AI. To compare trends, the levels of all three are set equal to 100 for the monthly average in 2023. Looking back to 2022, you can see that the three lines move much the same. But starting in 2024, they separate quite a bit.
Waugh notes that many of the AI-relevant goods are wholly or partially exempt from Trump’s tariffs. He also offers a rough calculation that if AI imports had not risen as they have, the US trade deficit would have been about $200 billion less in 2025. If policies are judged by their outcomes, not their stated rationales, the Trump administration has decided that imports of AI-related items are important enough that the usual rationales for tariffs (cut the trade deficit, it should all be immediately built in the US, and so on) do not apply.
At a global level, it seems plausible that artificial intelligence technologies will cause an increase in world trade, no matter the tariff and geopolitical issues. The World Trade Report 2025 produced by the World Trade Organization (September 2025) is subtitled “Making trade and AI work together to the benefit of all.” The report notes:
WTO simulations suggest that AI could lead to significant increases in global trade and real income. These simulations are based on an extension of the standard WTO Global Trade Model with AI services and incorporate trade cost reductions, a shift in tasks from labour to AI and productivity gains related to this shift. They suggest that AI could lead to significant increases in trade and GDP by 2040, with global trade projected to rise by 34 to 37 per cent across different scenarios. The largest growth occurs in the trade of digitally deliverable services (42 per cent), including AI services. This trade increase reflects (i) reduced operational trade costs, (ii) the strong projected growth of AI services combined with the high tradability of AI services, related to its geographic concentration of production in a few regions, and (iii) the aboveaverage productivity growth in more tradable sectors, in particular digitally deliverable services. The development and deployment of AI are also projected to generate substantial global GDP increases, ranging from 12 to 13 per cent across scenarios.
There have been other times in history when the political winds were leaning against international trade, but underlying economic forces created large increases in trade anyway. As one example that I wrote about here a few months back, the wave of globalization that happened from about 1870 to 1914 happened in the face of tariff levels that were remarkably high by modern standards. However, this was also a time of dramatic improvements in transportatation, communication, and infrastructure, which combined to drive trade higher even in the face of high tariffs. Perhaps AI will become another example in which technological force that drive down the costs of trade and increase the benefits of trade will have bigger global effect than efforts and events that should seem to have a negative effect on trade.
