U.S. International Trade: Trends and Forecasts

This report provides an overview of the current status, trends, and forecasts for U.S. international trade. The purpose of this report is to provide current data and brief explanations for the various types of trade flows, particularly U.S. exports, along with a short discussion of particular trends and points of contention related to trade policy. The United States is now running record deficits in its trade with other nations. In 2006 the U.S. merchandise trade deficit reached 838 billion on a balance-of-payments BoP basis and 817 billion on a Census basis. A surplus in services trade of 80 billion resulted in a deficit of 759 billion on goods and services for the year up 44 billion or 6.2 from the 714 billion deficit in 2005. While U.S. exports are highly competitive in world markets, these sales abroad are overshadowed by the huge demand by Americans for imported products. In 2006, U.S. exports of goods and services totaled 1,446 billion, while U.S. imports reached 2,204 billion. Since 1976, the United States has incurred continual merchandise trade deficits with annual amounts fluctuating around an upward trend. Trade deficits are a concern for Congress because they may generate trade friction and pressures for the government to do more to open foreign markets, to shield U.S. producers from foreign competition, or to assist U.S. industries to become more competitive. As the deficit increases, the risk also rises of a precipitous drop in the value of the dollar and disruption in financial markets. Compared to a Federal Reserve index of currencies weighted by importance to U.S. trade, the dollar has lost a third of its value since 2002. In 2007, the dollar has fallen against major currencies such as the euro, yen, British pound, Australian dollar, and Canadian dollar.