U.S. International Trade: Trends and Forecasts

The U.S. trade deficit is shrinking primarily because the global financial crisis is causing U.S. imports to drop faster than U.S. exports. The global simultaneous recession, however, implies that exporting countries cannot rely on increased foreign demand to make up for slack demand at home. Even though U.S. imports are projected to decline, companies competing with imports are still likely to face diminishing demand as the domestic economy shrinks. These conditions imply that the political forces to protect domestic industry from imports are likely to intensify both in the United States and abroad.