Publication Number: 3940

Report Title: Shifts in U.S. Merchandise Trade 2006

Investigation Number: 332-345

Author's name(s): John Kitzmiller, Gail Burns, Michael Anderson, Raymond Cantrell, John Davitt, Vincent DeSapio, Queena Fan, Cynthia Foreso, Alfred Forstall, Jack Greenblatt, Gerald Houck, Christopher Johnson, Peder Andersen, Katherine Linton, Ruben Mata, Elizabeth Nesbitt, Laura Polly, John Reeder, Laura Rodriguez, Karl Tsuji, Norman VanToai, Linda White, Falan Yinug

Date Published: August 2007

Report Description/Introductory Text: In 2006, U.S. total merchandise trade (exports plus imports) rose by $308.2 billion (12 percent) to $2.8 trillion. This increase was slightly less in percent terms than in 2005, while slightly higher in value. U.S. total merchandise trade in 2005 represented 76 percent of total U.S. combined trade (exports plus imports of merchandise and services) and 21 percent of U.S. gross domestic product (GDP), in both instances 1 percent higher than in 2005. The rate of increase in the U.S. merchandise trade deficit slowed from 17 percent in 2005 to 7 percent in 2006 even as the deficit grew from $858.4 billion in 2005 to $915.6 billion in 2006.

Continued economic growth in the United States and its major trading partners contributed to increased bilateral trade flows in 2006. Strong growth in consumer spending, business structures investment, and exports supported the economic performance of the United States. Crude petroleum prices continued to rise in 2006, resulting from increased global demand as well as supply disruptions in foreign countries.

The U.S. merchandise trade deficit expanded every year during the 2002–06 period (table US-1). In 2006, the U.S. merchandise trade deficit grew by $57.2 billion (7 percent) to a record $915.6 billion. Unlike 2005, the value of the U.S. merchandise trade deficit was less than the value of U.S. merchandise exports, as the rate of increase in exports (15.6 percent) exceeded the rate of increase in imports (11 percent).

Although all industry/commodity sectors registered trade deficits in 2006, as they did in 2005, the rate of the overall deficit growth slowed in 2006. The deficits in the transportation equipment, forest products, and chemicals sectors actually declined as the increase in exports for each of the three exceeded the increase in imports.

U.S. trade in energy-related products—crude petroleum, petroleum products, and natural gas and components— registered the largest trade deficit ($280.2 billion) in 2006, as it has in every year since 2002, as well as the largest deficit increase ($36.9 billion, or 15 percent), primarily because of higher prices. The electronic products sector recorded the second-largest trade deficit in 2006 ($162.8 billion), as well as the second-largest deficit increase ($13.0 billion, or 9 percent), as U.S. companies continued to shift 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, Germany, India, Japan, Mexico, Korea (South), United Kingdom

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