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. In January 2017, President Trump withdrew the United States from the Trans-Pacific Partnership as part of his promise to bring jobs and manufacturing back to the United States.
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 May 2019, Offshore Technology ranked the world's top 10 oil-producing countries. The United States topped the list at 12.0 million barrels of oil 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, Russia ranked second at 11.2 million barrels, followed by Saudi Arabia at 11.1 million barrels.
Foreign trade is more sensitive than most business fields to political decisions. The future is uncertain and will remain so until the outcome of President Donald Trump's actions on trade policy become clearer. Trump not only ended the TPP agreement and renegotiated NAFTA and other trade pacts, he also imposed 10 percent aluminum tariffs and 25 percent steel tariffs in 2018, which benefited domestic steel mills but caused input costs to rise for other manufacturers. In early 2020, President Trump indicated he planned to increase those tariffs because they had fallen short of expectations. In late 2019, the United States and China reached Phase One of a new trade agreement that cooled a trade in which U.S. tariffs on a variety of Chinese goods had been met with retaliatory tariffs. In addition to the average American consumer, those affected by the trade war included U.S. soybean farmers and pork producers. A key U.S. ally, the United Kingdom, voted in 2016 to leave the European Union, the "Brexit," throwing long-standing trade accords into question and renewing interest in unilateral trade agreements. As of December 2019, the European Union had extended the deadline for Brexit to January 31, 2020. The U.K. then left the European Union, and its future trade situation remained unknown as of then. Wars, natural disasters, disease, weather, and many other factors can influence trade. It is difficult to predict long-term future prospects. It is safe to observe, however, that nearly all nations stand to benefit from easy and equitable global trade.
While severe restrictions on international travel and trade, due to the coronavirus outbreak in 2020, interrupted ongoing trade, the need for trade research and negotiations among nations remained of high importance. Those working in the foreign trade field found themselves challenged with reimagining traditional practices and policies for a world adjusting for a global pandemic.
The U.S. Department of Commerce reported that in the U.S., the goods and services deficit had increased $101.9 billion, or by 17.7 percent, from 2019, due to the impact of the pandemic on foreign trade. Exports decreased $396.4 billion, or 15.7 percent, and imports decreased $294.5 billion, or 9.5 percent, from 2019. Travel decreased $95.3 billion in 2020 and transport decreased $35.9 billion in 2020, from 2019. The introduction of COVID-19 vaccines in early 2021 and recovery of the economy will help boost foreign trade. In addition, a shift in the U.S. trade agenda due to the new administration is expected to create "broader, more multilateral trade policy," as described in an IHS Market forecast. The market research group predicts that "the volume of global merchandise trade [will] grow to 13.65 billion metric tons in 2021 and 14.2 billion metric tons in 2022. This points to a recovery in the forthcoming years with year-on-year growth rates of 7.5 percent in 2021 and 4.1 percent in 2022." Moving forward, IHS predicts a compound annual growth rate for the global trade volume of 3.2 percent for 2021 through 2030. This is close to the annual growth rate of 3.5 percent that occurred in global trade volume from 2000 through 2019.