Economic Snapshot | Trade and Globalization

The scarcity of U.S. trade surpluses

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Snapshot for September 1, 1999

The scarcity of U.S. trade surpluses

Although the total U.S. trade deficit grew to $229 billion in 1998, the United States does have trade surpluses with a few countries, as shown in the first figure below. Unfortunately, the countries with which the United States runs a trade surplus do not promise much future trade growth. Only three of the 10 countries that ran a trade deficit with the United States in 1998 also had deficits at the beginning of the decade in 1991 (Brazil, Saudi Arabia, and Hong Kong).

Figure 1

The second figure shows the top eight trade surplus industries. The combined surplus of these industries was $101 billion in 1997 (the most recent year for which data are available). While most of the surplus industries involve high-technology and high-wage production (aircraft, chemicals, construction machinery, scientific instruments, and engines and turbines), the United States is also a net exporter of three major commodity products – cash grains, meat packing products, and cigarettes. The downside is that competition in commodity markets is price based and generates few high-wage jobs.

Figure 2

The United States’ dependence on commodity exports, the steady erosion of output and employment in high-wage, high technologies industries, and the escalating total U.S. trade deficit are stark indicators of the failure of U.S. trade and industrial policies to nurture and sustain our international competitiveness

Source: Economic Policy Institute and U.S. Dept. of Commerce, Foreign Trade Highlights.

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