International Trade Plays Major Role in Iowa’s Economy

Foreign Direct Investment (FDI) accounted for 36,500 of Iowa’s 226,580 manufacturing jobs in 2022, a figure that’s been on a steady climb since 2010, according to a region-focused report on international trade released in June by the Midwest Manufacturing Association.

The 2025 Midwest Manufacturing Trade and Foreign Investment Review, produced by Economic Leadership LLC, draws on trade data from the U.S. Census Bureau and economic data from Lightcast to examine the role of manufacturing in the Midwest economy with a focus on imports, exports and FDI. The Midwest region is defined as Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin. Most data in the report is from 2024, the latest year for which complete annual data is available.

Other highlights from the report:
• Manufacturing accounts for 12% of all employment in Midwest and is the top contributing industry to the region’s GDP.
• For each job in manufacturing, an additional three jobs are supported elsewhere in the Midwest economy.
• The top three trading partners for both imports and exports in the Midwest are Canada, Mexico, and China, respectively.
• The total employment impact of exports on the Midwest economy is approximately 3 million workers, representing about 8% of the total workforce.

Imports, Exports Both Rising
In its executive summary the report noted “manufacturers in the Midwest depend on international trade both to access global markets and to secure essential inputs for their products with real exports and imports both on the rise. Manufacturing in the Midwest has also become more reliant on foreign investors and employers. Many of the region’s top manufacturing industries, including transportation equipment, are engaging in international trade with company subsidiaries abroad. This has contributed to
the increase in real imports over time.”

The report’s authors also emphasize international trade’s “vital role in the manufacturing industry,” pointing out: “Access to international markets enables companies to expand their customer base beyond domestic demand, allowing them to operate at larger scales and reduce costs. Imports also provide access to raw materials and other inputs that may not be available domestically. For the Midwest—a region heavily reliant on industrial output—trade remains a critical component of economic performance.”

Exports are described as “a key source of new revenue for the economy” that “also help buffer local economies against downturns by tapping into global demand cycles.”

Both Imports and Exports Support Iowa Jobs
Iowa’s 226,580 manufacturing jobs comprised about 5% of the Midwest total. The report shows the importance of both imports and exports on Iowa’s manufacturing activity.

“Trade opens doors for Iowa manufacturers and the communities they support,” said ABI President Nicole Crain. “Global markets create opportunities for growth, attract investment, and sustain thousands of high-quality jobs right here at home.”

Across Iowa, the reports shows, 4% of total employment and 25,560 jobs were supported directly or indirectly by manufacturing exports, in 2024. Imports met 17% of Iowa’s demand for manufactured goods. Manufacturing exports for the state were estimated at $14 billion, helping Iowa to a trade surplus on an inflation-adjusted basis.

Nearly 35,000 Jobs From Export Ripple Effect
“Export-related jobs in the manufacturing industry also generate broader economic benefits beyond the initial employees and their payroll,” the report notes. Economists quantify “ripple effects” — the additional economic output manufacturing stimulates through supply chain interactions and house- hold spending by workers — using multipliers, which are derived from input-output models that track spending between industries within a region.

According to labor data compiler Lightcast’s input-output model, the manufacturing industry in the Midwest has an employment multiplier of 4.27, meaning an additional 3.27 jobs are generated elsewhere in the Midwest economy for every one job created in manufacturing. The multiplier effect from manufacturing exports accounted for 34,660 jobs in Iowa, according to the report.

sector, were agriculture and construction machinery, $2.43 billion; meat products, $2.03 billion; grain and oil seed milling products, $1.23 billion; basic chemicals, $1.09 billion; and pesticides, fertilizers and other ag chemicals, $0.93 billion.

Of Iowa’s $127.56 billion in manufacturing revenue, $14.39 billion or 11.3%, is attributed to manufacturing exports.

Canada, Mexico, China Iowa’s Top Trading Partners
Top customers for Iowa’s exports are Canada, $5.03 billion; Mexico, $3.17 billion; Japan $0.97 billion; China, $0.93 billion and Brazil, $0.79 billion. On the import side, Canada ranks first at $3.61 billion, followed by Mexico, $2.41 billion; China, $1.29 billion; Germany, $1.0 billion; and Italy, $0.43 billion. The surplus of Iowa’s exports over
imports widened between 2010 and 2014 but has narrowed to its historical range and remained roughly constant since.

Trends to watch: Related-party trading, Midwest lagging, automation
The report also identifies three other international trade trends to keep an eye on:
• “The nature of trade is evolving.” As more companies operate internationally with facilities and supply chains spread across multiple countries, transactions termed “related-party trading” between U.S. companies and their foreign subsidiaries, or between foreign companies and their U.S. affiliates may reflect internal business strategies rather than traditional market competition. In cases when it’s cheaper or more efficient for a company to manufacture a component abroad and shipping it to the U.S. for final assembly, “such imports may not have a negative impact.”

• The Midwest is the nation’s traditional manufacturing hub with employment trends that historically mirror the national average, but that may be changing. National manufacturing employment is projected to outpace that of the Midwest in the next decade, suggesting stronger job growth in other regions.

• Employment growth remained sluggish during the recovery, but real GDP in the manufacturing sector grew at a faster pace. “By 2024, real GDP in manufacturing was 13 percent above its 2007 level, whereas employment remained six percent lower. This divergence suggests that companies may be maintaining output by relying more on automation and fewer workers.”

“While technology and automation are reshaping manufacturing, Iowa companies are proving they can adapt and thrive,” Ms. Crain said. “Our role is to ensure they have the workforce, infrastructure, and policy environment to seize these opportunities and stay competitive on a global scale."