Trade ties the U.S. economy inextricably to other world economies. In 2010, U.S. exports of goods and services amounted to $1.8 trillion, about 12.5 percent of gross domestic product; U.S. imports were much higher, $2.3 trillion. Americans have for years imported far more goods and services than they exported, incurring increasing debts to foreigners in the process. The U.S. current account deficit of $470 billion in 2010, although down in the recession from $706 billion in 2008, still came to more than five times that of Spain, the country with the next largest deficit.
Huge tides of financial transactions flow daily across U.S. borders. At the end of 2009 U.S. companies and individuals had more direct (non-stock share) investment in non-U.S. companies than those of any other nation. U.S. companies similarly were the greatest recipient of foreign direct investment.
U.S. exports of goods in 2010 came to $1.3 trillion. Top exports were autos and auto parts ($112 billion), civilian aircraft and aircraft engines ($53 billion), pharmaceuticals ($47 billion) and semiconductors ($47 billion). Categories of chemical exports added up to $67 billion. The United States’ largest trading partners in 2010 were Canada, China, Mexico, Japan, and Germany.
In 2010 the United States remained the top agricultural exporting country, shipping goods worth a record $116 billion. “For the first time, China emerged as the top market for U.S. agricultural products, with $17.5 billion in sales,” Secretary of Agriculture Tom Vilsack said. “Canada was second with $16.9 billion.” About a third of U.S. harvested acreage is exported.
Total U.S. imports of goods in 2010 came to $1.9 trillion. By far the biggest import was crude oil, $252 billion, down from $342 billion in 2008 because of the recession. Other top exports were autos and auto parts ($225 billion), pharmaceuticals ($85 billion), and computer accessories ($61 billion).
Services accounted in 2010 for 30 percent of total U.S. exports, $543 billion; more than 30 percent of services exports involved travel and transportation. Services imports, including transport of goods on non-U.S. ships and flights on non-U.S. airlines, that year came to $394 billion.
The U.S. economy is one of the most open to trade and foreign investment, but that was not always so. The record high tariffs imposed by the Smoot-Hawley Act of 1930 brought retaliatory tariffs by U.S. trading partners and, in the view of many scholars, worsened the worldwide Great Depression.
Since World War II, the United States has become a leader for free trade. In General Agreement on Tariffs and Trade (GATT) negotiations and, since 1995, in World Trade Organization (WTO) negotiations, the U.S. has pressed for tariff cuts and reductions in nontariff barriers.
Reflecting the change in policy, U.S. Secretary of State Cordell Hull said in 1948 that open trade “dovetailed with peace; high tariffs, trade barriers, and unfair economic competition, with war. … If we could get a freer flow of trade … so that one country would not be deadly jealous of another and the living standards of all countries might rise, thereby eliminating the economic dissatisfaction that breeds war, we might have a reasonable chance of lasting peace.”
Trade negotiations have become increasingly difficult, however. A WTO round launched in Doha, Qatar, in 2001 has stalled for nine years over major divisions between developed and emerging economies on a range of agricultural subsidy issues. At a June 2010 meeting in Toronto, G-20 leaders dropped previous language setting a target date for completion of the negotiations.
The United States negotiated a number of free-trade agreements with partners from 1990 through 2005. The biggest ones — with Canada, Mexico, and Central America (NAFTA and CAFTA) — remain politically controversial in the United States. Subsequent FTAs negotiated by President George W. Bush’s administration with Panama, Colombia, and South Korea continue to await congressional approval.