Download Locations

• U.S. Department of State

Summary

In 2003 the United States incurred a merchandise trade deficit of $535.7 billion on a Census basis and $549.4 billion on a balance-of-payments basis (BoP). A surplus in services trade of $60 billion gave a deficit of $489.3 billion on goods and services (BoP) for the year, 17% higher than 2002. Year-to-date (January-September 2004), the trade deficit in goods and services, at $444.5 billion, is 19.8% higher compared to the same period in 2003. Since 1976, the United States has incurred continual merchandise trade deficits. They increased dramatically from $36.5 billion in 1982 to a peak in 1987 at $159.6 billion. The deficit dropped to $74.1 billion in 1991 but rose to $436.1 billion in 2000 and to $535.7 billion in 2003. (Census basis). Overall U.S. trade deficits reflect a shortage of savings in the domestic economy and a reliance on capital imports to finance that shortfall. Capital inflows support a stronger dollar which, along with foreign trade barriers, can help make U.S. products relatively expensive in some overseas locations, thereby contributing to a trade deficit in goods. Outsourcing by U.S. companies also creates foreign competition for U.S.-made goods and services, although it tends to generate foreign demand for U.S.-made components. 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. The trade deficit eased temporarily during the recession of 1990-1991, but it worsened over 1993-95 as the United States recovered faster than did Europe or Japan. In 19972000, it worsened further as the Asian financial crisis caused a fall in U.S. exports to Asia and a marked increase in U.S. imports from Asia as well as rising U.S. imports of capital. The 2001 recession caused the deficit to shrink, but as the economy has recovered and oil prices have risen, it has grown significantly. In 2003, U.S. goods trade totaled $1.98 trillion, compared to $1.85 trillion in 2002 and $1.87 trillion in 2001, with exports of $724 billion and imports of $1,259 billion (Census basis). In 2003, U.S. exports increased by 4.4%, while imports rose by 8.4%. The broadest measure of U.S. international economic transactions is the balance on current account. In addition to merchandise trade, it includes trade in services and unilateral transfers. In 2003, the current account deficit rose to $549.4 billion from $480.9 billion in 2002. After reaching a peak of $160.7 billion in 1987, the current account deficit had fallen steadily through 1991, when it reached a surplus of $3.8 billion, before turning into deficit again. The current account deficit is projected to rise to about $565.8 billion in 2004. In trade in advanced technology products, the U.S. balance dropped from a surplus of $32.2 billion in 1997 to a deficit of $27.4 billion in 2003. In trade in passenger automobiles, the United States has been running a deficit, particularly with Japan, Canada, Germany, and Mexico.

Related Legislation:
• S.19

XML