Publication Number: 3874

Report Title: Shifts in U. S. Merchandise Trade 2005

Investigation Number: 332-345

Author's name(s): Jeff Clark, John Reeder, Queena Fan, Heather Sykes, Ruben Mata, Alfred Forstall, Edmund Cappuccilli, Raymond Cantrell, Cynthia Foreso, Laura Rodriguez, Norman Van Toai, Gerald Houck, Christopher Mapes, Judith-Anne Webster, Michelle Vac-Senecal, Peder Andersen, Deborah McNay, Linda White, Laura Polly, John Davitt, John Kitzmiller, Christopher Johnson, Falan Yinug, Jeff Clark, Douglas Newman

Date Published: August 2006

Report Description/Introductory Text: In 2005, U.S. total merchandise trade (exports plus imports) rose $279.0 billion (13 percent) to $2.5 trillion. This increase, by value and percent, was slightly less than the growth in trade registered in 2004. U.S. total merchandise trade in 2005 represented 75 percent of total U.S. combined trade (exports plus imports of merchandise and services), the same percentage as in 2004. It also represented 20 percent of U.S. gross domestic product (GDP), up from 19 percent in 2004. The rate of increase in the U.S. merchandise trade deficit slowed from 22 percent in 2004 to 17 percent in 2005 as the deficit expanded from $733.0 billion in 2004 to $858.4 billion in 2005.

Continued economic growth in the United States and among its trading partners contributed to increased bilateral trade flows in 2005. Strong growth in consumer spending, business fixed investment, and housing investment supported the economic performance of the United States. As in 2004, rising crude petroleum prices, influenced by increasing global demand as well as supply disruptions in foreign countries and along the Gulf Coast, impeded U.S. economic growth during 2005 and favored the growth of import values over export values. The impact of Hurricanes Katrina and Rita i: estimated to have reduced U.S. growth by about 0.7 percent in the third quarter and 0.5 percent in the fourth quarter.

During 2001-05, the U.S. merchandise trade deficit expanded every year. In 2005, the U.S. merchandise trade deficit grew by $125.4 billion (17 percent) to $858.4 billion, another record. As in 2004, the value of the U.S. merchandise trade deficit exceeded the value of U.S. merchandise exports, indicating that the United States imported more than twice as much merchandise as it exported.

Although all industry/commodity sectors registered trade deficits in 2005, as they did in 2004, the rate of overall deficit growth slowed in 2005. The rates of deficit growth for several sectors, notably agricultural products, accelerated substantially in 2005; however, the transportation equipment sector reduced its deficit, and the forest products sector's deficit was only marginally greater than in 2004.

U.S. trade in energy-related products -crude petroleum, petroleum products, and natural gas and components -registered both the largest sector trade deficit in 2005, as it has in every year since 2001, and the largest deficit increase, primarily because of higher prices. The electronic products sector recorded the second-largest trade deficit in 2005, as well as the second-largest deficit increase, as U.S. companies continued to move production overseas to take advantage of lower production costs and to serve growing Asian markets.

Topics Covered: trade, imports, exports, trade balance, trade deficit, merchandise trade

Countries: Canada, China, Mexico, Japan, Korea (South), Germany, United Kingdom, Ireland

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