How AI Boosts International Trade

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…