Overall Trends in U.S. International Merchandise Trade
Overall Trends in U.S. International Merchandise Trade
The United States is the worlds largest merchandise-trading nation,5 accounting for 12 percent of world merchandise exports and about 19 percent of world merchandise imports in 20006 (table 1). From 1990 to 2001, the value of U.S. international merchandise trade more than doubled (in inflation-adjusted dollars), from $891 billion to over $2 trillion (table 2, p. 10). During this period, the value of U.S. merchandise trade grew at an average annual rate of 8 percent, while growth in U.S. real gross domestic product (GDP) averaged 3 percent per year.
U.S. merchandise exports accounted for 38 percent of traded goods in 2001, compared with 44 percent in 1990. Imports grew to 62 percent of traded goods in 2001. The different growth rates for imports and exports resulted in a sharp rise in the U.S. merchandise trade deficit (figure 1). In just over a decade, the U.S. merchandise trade deficit more than quadrupled from $105 billion to $490 billion (in inflation-adjusted dollars). Despite this large increase, the deficit rose at a slower rate in 2001 when compared with 2000, as both exports and imports fell (table 2). Throughout most of the 1990s, strong growth of the U.S. economy spurred the rise in imports and increased the merchandise trade deficit. Rising household wealth and income in the United States and strong consumer demand are some of the key factors that continue to contribute to the increase in merchandise imports. Growth in trade, whether imports or exports, results in higher levels of international freight movement and the demand for expanded freight transportation services.
In 2001, the value of total U.S. international merchandise trade declined nearly 4 percent from the record $2.2 trillion reached in 2000 (in inflation-adjusted terms), the largest annual decrease since 19907 (figure 2). In 2000, both trade and GDP grew at high positive rates. The decline in 2001 was due, in part, to the weakness of global economic activity and the effect of the September 11 terrorist attacks. Exports were particularly affected, falling by 6 percent in 2001, while imports fell 3 percent.8 Between 1990 and 2001, merchandise trade saw greater year-to-year fluctuations than U.S. GDP due to its dependence on global economic activity.
Importance of Merchandise Trade to the U.S. Economy
Despite the 2001 decline in trade, the relative importance of international merchandise trade to the overall U.S. economy has increased during the past three decades. Not only did the growth rate in trade continue to exceed the growth rate in the overall U.S. economy (figure 3), but the ratio of international goods trade in comparison to GDP also rose. By 2001, U.S. international merchandise trade (both exports and imports) was more than 20 times greater than in 1970, while total U.S. economic output was about 10 times greater (in current dollars).9 The ratio of the value of U.S. merchandise trade to GDP reached 22 percent in 2001, a sizeable jump from 13 percent in 1990 (both in inflation-adjusted terms).
Although it is instructive to compare the ratio of international merchandise trade to overall GDP, this ratio understates the importance of international goods trade because overall GDP is derived from both goods and services. The ratio of merchandise trade to goods GDP is, therefore, more comparable than the ratio to overall GDP. Compared with three decades ago, international merchandise trade today has risen in relation to goods GDP (the proportion of GDP produced by the goods sectors). Of the primary GDP sectors, only agriculture, mining, and manufacturing are significant producers of goods that are traded internationally (figure 4). The construction sector produces goods (e.g., highways, bridges, and buildings) that are not traded internationally and are excluded from merchandise trade statistics.
The ratio of goods exports to goods GDP was 43 percent in 2000, up from 15 percent in 1970.10 This suggests a rapid surge in merchandise exports compared to domestic goods production, a surge also evident in inflation-adjusted data available from 1987 to 2000. By contrast, a relatively modest change is seen when comparing goods exports to overall GDP (figure 5). Examining trends in the major commodities also confirms the increasing importance of exports to the goods-producing sectors of the U.S. economy.
With international trade growing so rapidly, planning and deployment of multimodal freight transportation systems and services to effectively move the resulting cargo have become key areas to address. The development and maintenance of intermodal connectors is a particularly critical consideration, since such connections are often the weakest links in the nations multimodal transportation networks (USDOT MARAD 2002b, p. 3-5; USDOT FHWA 2000, p. 33).11
5 This report primarily analyzes trends in U.S. international merchandise trade in terms of value, because aggregate trade data for both exports and imports by weight are not available for all modes of transportation. It is possible, when prices change significantly, for the value of trade to change at a rate different from the quantity or volume of trade. Where possible, this report uses reported data or estimates of aggregate weight by mode of transportation to show changes in trade volumes.
7 Data on inflation-adjusted exports and imports of goods are only available from 1987 and the 4 percent annual decrease is the largest recorded decline since then. The only other decline was a less than 1 percent decline in imports in 1991 that followed the U.S. economic recession in that year but was offset by a 7 percent growth in U.S. merchandise exports.
9 A similar comparison in inflation-adjusted terms is possible only for 1987 to 2001, because data on total merchandise trade, adjusted for inflation in chained dollars, are unavailable prior to 1987. For the comparable data in real terms, see Statistical Appendix table C-3, p. 117.
10 Export figures represent the value of the traded commodity. In contrast, goods GDP figures for agriculture, mining, and manufacturing represent the value-added by production of goods of these sectors to the U.S. economy. Therefore, it would be inaccurate to say that over 40 percent of U.S. merchandise production was exported in 2001 (Bordo et al. 1999).
11 Intermodal connectors are often local, county, or city streets and remain one of the key areas where improvements are needed in the intermodal transportation system (USDOT MARAD 2002b, p. 3-5; USDOT FHWA 2000, p. 33).