Foreign Trade

The most important factor determining the outlook for foreign trade is the status of trade agreements. When trade agreements are being negotiated or come up for a vote in Congress, various interest groups sometimes apply pressure for the inclusion of terms favorable to their constituents. For example, American labor unions often want an agreement to guarantee foreign laborers some of the protections that American workers enjoy. This is not entirely a humanitarian gesture. Manufacturers located in the U.S. are often at a competitive disadvantage with offshore manufacturers who are far less burdened with laws requiring a decent minimum wage, worker safety measures, and protection of unions. If offshore producers are required to pay these expenses, American manufactures are less likely to shift production overseas.

For American businesses, intellectual property rights are an important concern they want any trade agreements to address. Many foreign countries have lax laws covering patents and copyrights or are casual about enforcing the laws. The American companies want to enforce exclusive rights to their intellectual properties worldwide so they can recoup their investments in research, development, and media production. On the other hand, some Americans are concerned that agreements delaying the manufacture of generic drugs abroad will impact health care in signatory countries.

Intellectual property was a component of the United States-Mexico-Canada Agreement, signed by the three trading partners in November 2018. The International Trade Administration claimed the renegotiated version of the North American Free Trade Agreement (NAFTA), signed into law in the United States in January 2020, would "create more balanced, reciprocal trade that supports high-paying jobs for Americans and grows the North American economy." Key changes were made in several categories, including agriculture, small and medium-sized businesses, manufacturing, and dairy. Additionally, the agreement also involved the modernization of provisions pertaining to intellectual property, digital trade, the environment, labor, currency, financial services, and shipment value levels.

Regardless of how Congress acts on proposed trade agreements, many activists urge Americans to vote with their wallets and buy American-made goods. Moody's Economy.com estimated that if every American spent an additional $3.33 on American-made goods, it would create almost 10,000 new jobs here. On the other hand, most economists argue that the key to prosperity is for each country to do what it is best at doing and trade with each other rather than trying to produce every good and service domestically.

In April 2024, the U.S. Energy Information Administration revealed that the United States topped the list of the world’s leading oil producing countries in 2023, at 21.91 million barrels per day. This partially was due to a decision by the Organization of the Petroleum Exporting Countries (OPEC) to limit supply. Following the United States, Saudi Arabia ranked second with 11.13 million barrels per day, followed by Russia at 10.75 million barrels.

Foreign trade is more sensitive than most business fields to political decisions. In 2024, the outcome of the U.S. presidential election had significant implications for global trade. During their debate in September 2024, former President Donald Trump, the Republican nominee, and Vice President Kamala Harris, the Democratic nominee, offered differing viewpoints. Trump vowed that he would implement 60 percent tariffs on goods imported from China, and 10 percent tariffs on all other imported goods. Harris argued that tariffs were synonymous with a imposing a sales tax on American households.

“In fact, the Biden administration recently imposed its own set of tariffs, while extending ones first levied during the Trump administration,” NBC News reported in a September 13, 2024, article. “Harris has not explicitly stated whether she would extend them, but on her campaign website, she said she would continue to ‘support American leadership in semiconductors, clean energy, AI, and other cutting edge industries of the future,’ while addressing ‘unfair trade practices from China or any competitor that undermines American workers.’”

After decreasing 1.2 percent in 2023, world trade was forecast to increase 2.6 percent in 2024 and 3.3 percent in 2025, according to an April 2024 World Trade Organization (WTO) analysis. The organization noted that trade had demonstrated a noteworthy resilience, despite several significant shocks to the economy, including Russia's military conflict with Ukraine, inflation, and skyrocketing energy prices. The WTO also predicted stable world GDP growth during the middle of the decade. After declining slightly to 2.6 percent in 2024 (from 2.7 percent the previous year), growth of 2.7 percent was expected in 2025.

"There is a high degree of uncertainty associated with the current forecast due to the large number of risk factors present in the global economy, including regional conflicts, geopolitical tensions, and rising protectionism," the WTO stated. This reflects the fact that, because wars, natural disasters, disease, weather, and many other variables can influence trade, it is difficult to predict long-term future prospects. Nevertheless, it is safe to observe that nearly all nations stand to benefit from easy and equitable global trade.