International trade in goods and services along with flows of financial capital affect virtually every person living in the United States. Whether one buys imported clothes, gasoline, computers, or cars; works in an industry that competes with imports; or sells products abroad, the influence of international trade on economic activity is pervasive. Although the United States is one of the three largest exporters in the world (China and Germany are the other two), U.S. sales abroad are overshadowed by the huge demand by American consumers and industry for imported products. Since 1976, the United States has incurred continual merchandise trade deficits with annual amounts increasing steadily until the plateau of years 2005 through 2008. Then in 2009 the U.S. trade deficit on goods declined roughly 39%, as U.S. imports fell much faster than exports during the recession. As the economy recovered the trade deficit began increasing again, by 28% in 2010 and 15% in 2011 ( Table 1 ). For Congress, the trade deficit and other aspects of international trade enter into public policy considerations through many portals. At the macroeconomic level, trade deficits are a concern because they affect U.S. economic growth, interest rates, labor, and the debt load of the economy. As the trade deficit rises relative to the total economy, the risk increases that the dollar will weaken, prices will rise, financial markets will be disrupted, and the economic well-being of the population will be reduced. A large trade deficit, however, naturally follows a booming economy as robust domestic demand generates purchases of both domestic and imported goods. At the strategic level, trade ties often lead to a deepening of bilateral relations with other nations that can develop into formal free trade agreements (FTAs) or political and security arrangements. Trade also can be used as a tool to accomplish strategic objectives—particularly through providing preferential trading arrangements or by imposing trade sanctions. At the microeconomic level, imports of specific products can generate trade friction and pressures from constituent interests for the government to shield U.S. producers from foreign competition, provide adjustment assistance, open foreign markets, or assist U.S. industries to become more competitive. At the household level, rising trade deficits and free trade agreements are often associated with employment, particularly concerns over a loss of jobs, a highly relevant issue for the American public. This report provides an overview of the current status, trends, and forecasts for U.S. import and export flows as well as certain trade balances. The purpose of this report is to provide current data and brief explanations for the various types of trade flows, along with a brief discussion of trends that help inform the discussion of the various policy issues mentioned above. However, an analysis of trade policy as an economic or strategic tool is beyond the scope of this report but can be found in various other CRS reports. Further detail on trade in specific commodities, with particular countries or regions, or for different time periods can be obtained from the Department of Commerce, from the U.S. International Trade Commission, or by contacting the authors of this report. For January-July 2012 merchandise exports increased 6% over the same period in 2011, imports increased 5%, and the U.S. trade deficit with the world increased, or became more negative, by 2%. These changes are lower than those from the same seven-month period in 2011, when exports increased by 18%, imports increased by 17%, and the trade deficit increased by 16%. For the year 2011, U.S. merchandise exports to the world rose 16%, U.S. merchandise imports also rose 16%, and the U.S. trade deficit rose 15%, from $645 billion in 2010 to $738 billion in 2011. Because imports are greater than exports, exports must increase at a greater percentage than imports to maintain the current trade balance. In 2011, as the U.S. economy continued to recover from the financial crisis, U.S. merchandise exports and imports finally surpassed their previous 2008 peaks. Another sign of the continued recovery was the 18% increase in the fuel deficit. Though down from 26% growth in 2010, it sharply contrasts the 48% decline in the fuel deficit in 2009. The U.S. top export commodity in 2011 changed from the historic top export of civilian aircraft, engines, and equipment, which increased 11.4% from 2010, to refined petroleum products, up 70%. The top import commodity remained crude oil and mineral fuels, up 29% in 2011, compared to an increase of 35% in 2010. The second leading U.S. import commodity was motor vehicles, up 7%. Total trade with China—the second-largest U.S. trade partner—continued to increase: U.S. exports to China rose 13%, U.S. imports from China rose 9%, and the U.S. trade deficit with China grew by 8%. In 2009, as the global financial crisis worsened and the United States and other developed countries dropped into recession, the declining U.S. trade deficit contributed positively to the growth in the U.S. economy. The U.S. recession would have been worse without the shrinking U.S. trade deficit. However, the faltering global economic conditions that caused the declining U.S. demand for imports, and hence the fall in the trade deficit, also caused a decline in demand for U.S. domestic goods and services. While U.S. imports declined in 2009, they rose in 2010 and 2011, forcing companies competing with imports to continue to face diminished demand as the domestic economy remained sluggish. These conditions create increased pressures on political forces to protect domestic industry from imports, not only in the United States, but around the world. As the world is recovering from the great recession countries are vying to capture the increase in global trade by keeping the value of their currencies low, particularly China. The global financial crisis made 2009 a very difficult and negative year for the United States and other developed countries' trade by any measurement metric. This sharp decline greatly contrasts the general trend over recent decades of large increases in U.S. and world trade. Even in real terms—movements net of price changes—trade in both goods and services fell dramatically in 2009 ( Figure 1 ). However, U.S. goods trade saw the most fluctuations. In 2009, U.S. merchandise exports to the world declined by 18%, while U.S. imports from the world declined 26% relative to 2008 values. Both flows reversed in 2010, with U.S. exports increasing by 21% and U.S. imports increasing by 23%. In 2009, the U.S. deficit in merchandise trade dropped by more than one-third, relative to 2008, to $506 billion, as the U.S. recession caused imports to decline faster than exports. As the U.S. economy began to recover in 2010, the U.S. merchandise deficit grew more negative by 28%. The deficit continued to grow in 2011 by 15%. Exports of goods of $1,497 billion in 2011 increased by $208 billion or 16% over the $1,289 billion in 2010. This places the growth in exports on track to achieve a doubling over the five-year period 2010-2015, a goal outlined in the President's National Export Initiative. Increases in major export sectors were refined petroleum products up $38 billion or 70%; civilian aircraft, engines, and equipment up $8 billion or 11%; and motor cars up $9 billion or 23%. Imports of goods of $2,236 billion increased by $302 billion or 16% over 2010. Increases in major import sectors were crude oil up $77 billion or 29%, motor cars up $8 billion or 7%, and refined petroleum products up $25 billion or 37%. The impact of the global financial crisis on U.S. goods trade and the slow recovery can be seen in both Figure 2 and Table 1 . U.S. exports and imports of goods began to decline in August 2008. This trend continued until exports of goods began to increase in May 2009 and imports began to increase in June. Monthly exports had dropped from $115 billion in August 2008 to $80 billion in April 2009. More drastically, monthly U.S. goods imports dropped from $187 billion in August 2008 to $119 billion in May 2009. Exports have generally continued increasing since the end of the recession. Imports also increased for much of that period, but have recently declined since March 2012. In 2011, total annual imports of services of $427 billion and exports of $606 billion yielded a surplus in U.S. services trade of $179 billion. The U.S. service industries, particularly financial services, tourism, shipping, and insurance, tend to compete well in international markets. U.S. services trade was also impacted by the global financial crisis but to a lesser extent than goods trade ( Table 2 ). Monthly services exports have mostly increased since the end of the recession, but fell in the last months of 2011 ( Figure 3 ). They have since recovered, remaining around $53 billion since May 2012. U.S. services imports have increased consistently since the end of the recession. Since the United States runs a surplus in trade in services and a deficit in trade in goods, the combined deficit on goods and services is lower (less negative) than the deficit on goods alone. In 2011, exports of goods and services of $2,103 billion and imports of $2,663 billion resulted in a deficit of $560 billion. Trade in goods and services has risen in importance in the U.S. economy over the past two decades. Figure 4 below shows imports and exports of goods and services, both in U.S. dollars and as a percentage of gross domestic product (GDP). By both measures trade is on the rise in the United States. In 1991 total trade was equal to about 20% of GDP and grew to more than 30% of GDP by 2011. While total trade has increased, imports have grown faster than exports, causing an increase in the trade deficit. In the most recent years it has fallen slightly, concurrent with the U.S. recession and global financial crisis. In 2011 the annual trade deficit on goods and services amounted to approximately 3.7% of U.S. GDP (U.S. GDP was $15,076 billion in 2011), up from 3.4% in 2010 but down from 4.8% in 2008, 5.1% in 2007, and 5.8% in 2006. A level of 5% for countries is considered to be cautionary by economic observers. At that level, other countries have experienced problems paying for imports and maintaining the value of their currency. Given the "safe haven" effect (investors seeking a safe investment) associated with U.S. Treasury securities, however, foreign investors continue to buy U.S. securities. As a result, U.S. interest rates have remained relatively low and the United States remains able to finance the excess of imports over exports. The U.S. trade deficit, however, does cause a weakening of the exchange value of the dollar. Overall U.S. trade deficits reflect a shortage of savings in the domestic economy and a reliance on capital imports to finance that shortfall. A savings shortfall is the analogue of excessive spending that is financed by borrowing. Households borrow for consumption; businesses borrow to invest; and the government borrows to cover its budget deficit. At the international transaction level, the savings shortfall is manifest when foreign capital flows into the United States to pay for its excess of imports (trade deficit). Whether this foreign borrowing is beneficial for the U.S. economy depends on how the imports of capital are used. If they are used to finance investments that generate a future return at a sufficiently high rate (they raise future output and productivity), then they may increase the well-being of current and future generations. However, if the imports are used only for current consumption, the net effect of the borrowing will be to shift the burden of repayment to future generations without a corresponding benefit to them. U.S. trade balances are macroeconomic variables that may or may not indicate underlying problems with the competitiveness of particular industries. The reason is that overall trade flows are determined, within the framework of institutional barriers to trade and the activities of individual industries, primarily by macroeconomic factors such as rates of growth, savings and investment behavior (including government budget deficits/surpluses), international capital flows, and exchange rates. Changes in the trade balance (defined as exports minus imports) are a component in deriving the nation's GDP. In the U.S. economy, where consumer spending and business investment are the largest components of the annual change in economic growth, changes in the trade balance generally reflect changes in these other, much larger, components of the economy. According to GDP accounting, the trade balance can be represented as contributing positively or negatively to the overall rate of growth in the economy, depending on activity in the other components in the accounts. For instance, in the late 1980s and early 1990s, when spending by consumers and businesses waned, growth in exports provided a boost to the overall rate of growth in the economy. Again in 2008, when consumer spending and business investment were weak, exports provided a comparatively large contribution to the rate of GDP growth. In 2008, exports accounted for about 9% of the rate of growth in national GDP, compared with the 5.9% contribution recorded in 1990. In 2009, as U.S. GDP declined by 3.5%, exports provided some impetus for growth, primarily due to a 30% drop in imports. The effects of exports, imports, and trade balance exert complex forces on the domestic economy. For instance, a large trade deficit naturally follows a booming economy, as increases in domestic demand lead to more purchases of imported goods. Many economists fear that the rising U.S. trade and current account deficits could lead to a large drop in the value of the U.S. dollar. The current account deficit has placed downward pressure on the dollar, although the "safe haven" effect comes into play to have the opposite effect. A weaker dollar boosts exports by making them cheaper, narrowing the U.S. trade deficit. Compared to a Federal Reserve index of major currencies weighted by importance to U.S. trade, the dollar has lost nearly one-third of its value since 2002, but has been rising in 2012 (see Figure 5 ). The dollar had fallen against the euro, yen, British pound, Australian dollar, and Canadian dollar. In fact, the U.S. dollar fell to parity with the Canadian dollar in September 2007 for the first time in 30 years, but between July and November 2008, the U.S. dollar strengthened against other currencies as the global financial crisis increased "safe haven demand" for the dollar. Since November 2009, the dollar lost some value, partly due to the Federal Reserve's lowering of interest rates. However, as the Eurozone debt crisis developed in 2010, global investors again sought the safety of U.S. Treasury securities and bid up the price of dollars. Although a weakened dollar helps to reduce U.S. trade imbalances, it also may reduce the dollar's attractiveness to foreign investors. If foreign investors stop offsetting the deficit by buying dollar-denominated assets, the value of the dollar could drop—possibly precipitously. In that case, U.S. interest rates would have to rise to attract more foreign investment; financial markets could be disrupted; and inflationary pressures could increase. As shown in Figure 6 , in terms of individual currencies, since January 2008, the dollar has been weakening with respect to the Japanese yen and Chinese renminbi but strengthening with respect to the euro and South Korean won. Currently, foreign investment in dollar assets along with purchases of securities by investors seeking a safe haven as well as from central banks of countries such as China have bolstered the value of the dollar. China's central bank has intervened in currency markets to keep its exchange rate relatively stable. A recent development in foreign country holdings of dollars and other reserve currencies is that some governments are turning toward creating sovereign wealth funds (SWFs). These are funds owned by governments that are invested in stocks, bonds, property, and other financial instruments denominated in dollars, euros, or other hard currency. For China, Japan, South Korea, Russia, and the oil-exporting nations of the Persian Gulf, the source of capital for these funds is coming from governmental holdings of foreign exchange. For China and Japan, for example, foreign exchange reserves have traditionally been invested by their respective central banks primarily in low-yielding but low-risk government bonds (i.e., U.S. Treasury securities). The purpose of sovereign wealth funds is to diversify investments and to earn a higher rate of return. For example, in September 2007, China created a sovereign wealth fund—the China Investment Corporation (CIC)—with initial capital of $200 billion. Depending on how these funds are managed and what leverage they acquire, they could affect U.S. interest rates (foreign purchases of U.S. Treasury securities tend to reduce U.S. interest rates), corporate activities (if funds buy significant voting shares of companies), and foreign access to technology and raw materials. The U.S. trade deficit provides some of the foreign exchange that goes to finance these sovereign wealth funds. How long can the United States keep running trade deficits? U.S. deficits in trade can continue for as long as foreign investors are willing to buy and hold U.S. assets, particularly government securities and other financial assets. Their willingness depends on a complicated array of factors including the perception of the United States as a safe haven for capital, relative rates of return on investments, interest rates on U.S. financial assets, actions by foreign central banks, and the savings and investment decisions of businesses, governments, and households. The policy levers that influence these factors affecting the trade deficit are held by the Federal Reserve (interest rates) as well as both Congress and the Administration (government budget deficits and trade policy), and their counterpart institutions abroad. In the 112 th Congress, legislation directed at the trade deficit has been taking several strategies. Some bills address trade barriers by particular countries, particularly China. Others are aimed at preventing manipulation of exchange rates or at imposing import duties to compensate for the arguably undervalued Chinese currency, as tracked in greater detail by other CRS reports. The merchandise (goods) trade balance is the most widely known and frequently used indicator of U.S. international economic activity. Also important is the concept of total merchandise trade, total exports plus total imports. In 2011, total merchandise trade reached $3,688 billion, a 16% increase over the 2010 value. This follows a 22% increase in 2010 (to $3,191 billion) and a 23% decrease in 2009 (to $2,616 billion). Merchandise exports in 2011 totaled $1,480 billion, while imports reached $2,208 billion (Census basis). The U.S. merchandise trade deficit fell massively from $816 billion in 2008 to $504 billion in 2009 but then increased to $635 billion in 2010 and $727 billion in 2011 ( Figure 7 ). U.S. merchandise exports decreased in 2001 and 2002 in response to the global slowdown, but then generally increased each year until 2009 ( Table 4 ). As shown in Figure 8 , the growth of imports has also been steady, although they too fell by 6.4% in 2001 before recovering in 2002. In 2003, import growth was nearly double export growth, although in 2004, export growth almost caught up with that of imports, and in 2005, the rate of increase for both dropped slightly. Growth in exports and imports slowed in 2007 with exports rising by 12.3% and imports by 5.7%. Likewise in 2008, exports grew faster than imports (12.4% versus 7.3%), but the trade deficit still increased. This is because U.S. imports are greater than U.S. exports, so exports must grow significantly faster than imports just for the deficit to remain constant. Then in 2009, with the full force of the financial crisis, exports decreased more slowly than imports (-17.9% versus -25.9%), before each took a sharp upward turn in 2010 as recovery began. In 2010 exports rose by 21%, followed by a slowing to 16% growth in 2011. U.S. imports grew 23% in 2010 followed by 15% in 2011. The current account provides a broader measure of U.S. trade because it includes services, investment income, and unilateral transfers in addition to merchandise trade ( Table 5 ). The balance on services includes travel, transportation, fees and royalties, insurance payments, and other government and private services. The balance on investment income includes income received on U.S. assets abroad minus income paid on foreign assets in the United States. Unilateral transfers are international transfers of funds for which there is no quid pro quo . These include private gifts, remittances, pension payments, and government grants (foreign aid). Data on the current account are announced several months later than those on trade in goods and services. Because the merchandise trade balance comprises the greater part of the current account, the two tend to track each other ( Figure 9 ). Unlike the merchandise trade balance, however, the services account has registered surpluses. Since Americans are such large investors in foreign economies, the United States traditionally also has a surplus in its investment income, $184 billion in 2010 and $227 billion in 2011, but the deficit in unilateral transfers (primarily dollars sent abroad by foreign workers and recent immigrants) totaled $131 billion in 2010 and $133 billion in 2011. Unilateral transfers have now reached more than triple the level of the late 1980s. Table 5 summarizes the components of the U.S. current account. In 2011, the U.S. deficit on current account rose to $466 billion from $442 billion in 2010. It was down considerably, however, from $801 billion in 2006. The 2011 deficit on current account, at 3.1% of GDP, closely followed the 2010 deficit on current account of 3.0% of GDP. These figures are well below the 5% level of caution used by the International Monetary Fund. Since the dollar is used as an international reserve currency, the United States can run trade deficits without the same downward pressure on the value of the dollar as other nations. Historically, the current account deficit fell from a then record-high $161 billion in 1987 to $79 billion in 1990, and switched to a $4 billion surplus in 1991 (primarily because of payments to fund the Gulf War by Japan and other nations). However, since a slight decline in 1995, the current account deficit increased significantly through 2006 except for a slight dip in 2001 ( Figure 9 ). The U.S. current account deficit decreased from 2007 through 2009, which largely reflected the decline in the trade deficit during the financial crisis, though due to an increase in investment income receipts from abroad the current account deficit began declining earlier than the merchandise trade deficit. The current account deficit then increased in 2010 and remained mainly flat in 2011. From 2012 to 2017 the current account deficit is forecasted to increase, mostly due to an increase in outgoing investment income payments, while the merchandise trade deficit is forecasted to remain relatively stable. According to IHS Global Insight, Inc., a leading U.S. economic forecasting firm, in 2012 the U.S. merchandise (goods) trade deficit is projected to reach about $742 billion on a balance of payments basis. It is then forecasted to decline (become less negative) in 2013 to $687 billion and then increase again in 2014 to $724 billion (see Table 6 and Figure 9 ). The current account deficit is forecasted to reach $514 billion for 2012, and like the merchandise deficit, it is forecasted to decline (become less negative) to $446 billion in 2013 and then increase to $503 billion in 2014. The overall U.S. merchandise trade balance consists of deficits or surpluses with each trading partner. Many economists view the overall figure as more significant than bilateral trade balances, since rising deficits with some nations are often offset by declining deficits or growing surpluses with others. Nonetheless, abnormally large or rapidly increasing trade deficits with particular countries are often viewed as indicators that underlying problems may exist with market access, the competitiveness of particular industries, currency misalignment, or macroeconomic adjustment. Figure 10 and Table 7 and Table 8 show U.S. trade balances with selected nations. Most of the U.S. trade deficit can be accounted for by trade with China, Mexico, Japan, Germany, Ireland, and Canada. Trade with the oil exporting countries, particularly Venezuela, Nigeria, and Saudi Arabia, also contributes to the U.S. trade deficit. U.S. trade surpluses occur in trade with Hong Kong, the Netherlands, Australia, and the United Arab Emirates. The U.S. trade deficit with China has soared over the past decade: from $32 billion in 1995 to $100 billion in 2000 and $295 billion in 2011. The negative net balance in trade with China has grown to account for about 40% of the total U.S. trade deficit. The U.S. trade deficit with China exceeded that with Japan for the first time in the year 2000 and now is almost five times as large. China claims that its trade is less imbalanced than U.S. data indicate. Chinese and U.S. trade data differ primarily because of the treatment of Hong Kong as an entrepot . Although Hong Kong reverted back to China in 1997, it is a separate customs area from mainland China, and Beijing counts Hong Kong as the destination for its exports sent there, even though the goods may be transshipped to other markets. For example, China would count a laptop computer that is assembled in Shanghai but shipped through Hong Kong before being exported to the United States as a sale to Hong Kong. By contrast, the United States and many of China's other trading partners count Chinese exports that are transshipped through Hong Kong as products from China, not Hong Kong, including goods that contain Hong Kong components or involve final packaging in Hong Kong. The United States also counts Hong Kong as the destination of U.S. products sent there, even those that are then reexported to China. However, Chinese statistics include many of such reexported goods as U.S. exports to China. So by U.S. figures, U.S. exports to China tend to be understated, while by Chinese figures, Chinese exports to the United States tend to be understated. The net result in 2011, for example, is that the trade surplus with the United States that China reported, $206 billion, was about two-thirds the U.S. deficit with China of $295 billion reported by the United States. Table 8 lists the U.S. top deficit trading partners in merchandise trade, on a Census basis, with U.S. export and U.S. import data for additional insight. In 2000, China not only overtook Japan as the top U.S. deficit trading partner, but its continuing growth in annual U.S. trade deficits since 2000 has been notable. In 2011 the U.S. trade deficit with China increased by 8%, with Japan 5%, and fell (became less negative) with Mexico by 3%. These countries were the top U.S. deficit trading partners. They were followed by Germany, Canada, Saudi Arabia, and Ireland. Total merchandise trade, exports plus imports, presents a clearer picture of countries' overall importance in U.S. trade relations than any other flow. As seen in Table 9 Canada continues to be the United States' largest total merchandise trading partner. Canada was followed by China, Mexico, Japan, Germany, the United Kingdom, South Korea, Brazil, and France. Canada was historically the largest supplier of U.S. imports, until 2007 when China's exports to the United States first surpassed those from Canada. Canada is by far the top purchaser of U.S. exports with Mexico second. In 2007 China surpassed Japan to become the third-largest U.S. export market. There is a commonly held perception that free trade agreements (FTAs) lead to larger U.S. deficits in trade. The perception seems to be generated mostly by U.S. trade with its immediate neighbors, Canada and Mexico, the U.S. partners in the North American Free Trade Agreement (NAFTA). Research indicates that the United States runs both surpluses and deficits with FTA partners. As shown in Figure 11 , in both 2010 and 2011, the United States ran trade surpluses with Australia, Singapore, Chile, Peru, Morocco, Bahrain, Jordan, and collectively with the group of countries in the U.S-Central America-Dominican Republic Free Trade Agreement (CAFTA-DR). The United States ran deficits with NAFTA partners and Israel in both 2010 and 2011, and with Oman in 2011. Figure 11 also shows the U.S. merchandise trade balance with the three new U.S FTA partners, Colombia, Peru, and South Korea. These three FTAs, however, were not in effect in 2010 or 2011, so the trade balances should not be interpreted as a result of these agreements. U.S. FTA partners in total represented 35% of U.S. trade in 2011. Due to Canada and Mexico's great importance in overall U.S. trade, NAFTA alone accounts for over 80% of all U.S. trade with FTA partners. Total U.S. goods trade with Canada and Mexico was over $1 trillion in 2011. Table 10 lists the current account and its components—trade balances on goods, services, income, net unilateral transfers—for selected U.S. trading partners. While trade in services, flows of income from investments, and remittances home by foreign workers are considerably smaller than merchandise flows, as the U.S. economy has become more globalized and service-oriented, these components of the current account have become more important. In many cases, the bilateral current account balances are quite different from bilateral balances on merchandise trade only. For example, the U.S. surplus in services and investment income with Canada turns a $38 billion deficit on goods into a $27 billion surplus on current account. Flows of investment income vary largely by country. In 2011, the United States had a large investment income surplus with the European Union and Canada, but large investment income deficits with China and Japan. Since Japan has invested considerable amounts in securities, equities, and factories in the United States, the United States ran a deficit of $32 billion in investment income with that country in 2011. This more than offset the surplus of $18 billion in trade in services with Japan. As a result, the current account deficit with Japan of $82 billion in 2011 exceeded the bilateral merchandise trade deficit of $65 billion. Likewise with China; the U.S. deficit on investment income of $33 billion far overshadowed the U.S. surplus of $15 billion in services. The rising deficit with many countries in investment income reflects the accumulating debt of the United States relative to various countries and country groups of the world. Inflows of capital to compensate for the U.S. trade deficit and a low U.S. savings rate help to maintain the value of the dollar, but interest paid and other income that accrues to that capital is often repatriated to the home countries. That means more capital must be invested in the United States or the United States must export more to compensate for the outflows of investment income. Despite increasing debts, again, in 2011, the United States ran an overall surplus of $227 billion in investment income with the rest of the world. The U.S. surplus in services at $179 billion also continued to grow. The deficit of $133 billion in unilateral transfers reflects the many workers in the United States who remit funds back to their home countries. Table 11 shows U.S. trade in advanced technology products. This includes about 500 commodity classification codes representing products whose technology is from a recognized high technology field such as aerospace, biotechnology, optoelectronics, and information and communications, or that represent the leading technology in a field. The United States long ran a surplus in these products, but that surplus dropped sharply in 2000 and turned into a deficit in 2002. The U.S. trade balance in high technology products was last in surplus in 2001. From 2002 to 2005, the United States ran a trade deficit in high technology products which grew roughly $10 billion dollars per year. In 2006 this deficit dropped to $38 billion, but in 2007 resumed its former growth path, jumping to $61.9 billion. In 2008, the U.S. advanced technology deficit stabilized at $61 billion, in 2009 decreased to $56 billion, and in 2010 jumped to $81 billion. The 2011 deficit then grew to $100 billion. This deficit does not necessarily imply that the United States is losing the high technology race, since many of the high technology imports are from U.S. companies or U.S. corporate affiliates, particularly in information and communications and optoelectronics, who assemble the products overseas. However, this growing deficit may warrant closer policy scrutiny. Figure 12 illustrates both our current deficit in high technology products and our continuing strong exports in these diverse areas. Table 12 and Figure 13 provide data on U.S. trade in all vehicles, passenger cars, trucks, and parts with the world and major automobile producing nations for 2011. This includes cars assembled in the United States by U.S. affiliates of foreign companies (counted as U.S. exports if shipped abroad), and cars assembled abroad by foreign affiliates of U.S. companies (counted as U.S. imports if shipped into the United States). The United States incurs the largest deficits in total vehicle trade with Japan, Mexico, Germany, and South Korea. Vehicle trade is a very important segment in U.S. trade, with exports valued at $139 billion and imports valued at $256 billion in 2011. This represents an increase of 20% for U.S. exports and 13% for U.S. imports of vehicles in 2011 compared with 2010. Different trade patterns occur in different vehicle segments. In 2011 the United States had a surplus in automotive trade with several partner nations, though none of the major partners shown in Table 12 . In 2011, U.S. exports of automobiles totaled $47 billion, an increase of 24% from 2010. Major car export partners in 2011 were Canada, Germany, China, Saudi Arabia, and Mexico. Neither Japan nor South Korea imported large values of U.S. automobiles in 2011. Imports of automobiles in 2011 totaled $123 billion, a 7% increase over 2010 imports from the world. Major source countries for automobiles in 2011 were Canada, Japan, Germany, Mexico, and South Korea. The U.S. trade balance in automobiles improved from a $76 billion deficit in 2010 to a $75 billion deficit in 2011, a 1.4% deficit decrease. U.S. motor truck exports registered a record $24 billion in sales in 2011, while the United States imported $20 billion in trucks from all nations. These figures represent a 25% increase in export sales and a 24% increase in imports. The major supplier for truck imports was Mexico in 2011. The U.S. truck trade surplus in 2011 was $4.5 billion, a 34% increase in surplus from 2010. The magnitude of U.S. energy trade relative to other U.S. traded products as well as the environmental, geopolitical, and strategic implications inherent to energy products and the countries that produce them, make U.S. energy trade of continuing concern to Congress. The United States is the world's top energy importer, and at $455 billion, energy is the top U.S. import at the most general commodity level. Energy products make up such a large portion of U.S. trade, particularly imports, that the overall U.S. trade balance looks quite different when energy products are removed. Figure 14 illustrates the size and scope of the United States energy balance relative to the overall U.S. trade balance. The solid, dark blue line graphs the actual U.S. merchandise trade deficit with the world in all commodities. The lines labeled "energy" and "no-energy" split that deficit into two components—energy products and everything else. In 2011, the energy trade deficit of $324 billion represented about 45% of the overall U.S. trade deficit of $727 billion. Energy trade differs considerably by product type. For example, although the United States has an overall deficit in energy trade, it has a small trade surplus in coal. This surplus offsets the deficits in other energy products, such that the U.S. trade deficit in crude oil ($335 billion) is actually larger than the overall energy trade deficit ($324 billion). Table 13 shows U.S. exports, imports, and trade balance for the primary forms of energy. Though the energy deficit often dominates policy discussions, both energy imports and exports are important in overall U.S. trade. The major sectors in U.S. exports of energy are refined petroleum products, coal, and natural gas. U.S. exports of refined petroleum products were in fact the top overall U.S. export in 2011 (using 4-digit HTS classification), replacing civilian aircraft, engines, and parts, the top export category in 2010. Major markets for U.S. refined petroleum products are Mexico, the Netherlands, Canada, Singapore, and Chile. In 2011, refined petroleum products constituted 70% of total U.S. energy exports, while coal represented 12% and natural gas 8%. These sectors grew at 70% for refined petroleum products, 62% for coal, and 33% for natural gas. Crude oil, however, remains the major driver of U.S. energy trade. It accounted for 74% of U.S. energy imports in 2011 and at $335 billion, the U.S. trade deficit in crude oil accounted for 46% of the overall U.S. trade deficit. Crude oil import values dropped from $354 billion in 2008 to $195 billion in 2009, then rebounded to $260 billion in 2010 and $337 billion in 2011. Table 14 shows the source countries for U.S. crude oil imports. Canada surpassed Saudi Arabia as the primary crude oil supplier to the United States in 2006. Although Canada is the major single U.S. supplier, roughly half of U.S. crude oil imports continue to come from members of the Organization of the Petroleum Exporting Countries (OPEC), with Saudi Arabia, Venezuela, and Nigeria the predominant suppliers. Imports from Iraq are recovering with $17 billion in 2011. In Table 14 , U.S. crude oil imports from OPEC nations are shown in bold. Listed below are a list of resources available online for international trade statistics. The single most authoritative, comprehensive, and frequently-published trade data statistical source is the monthly "FT900." Its actual title is U.S. International Trade in Goods and Services . The FT-900 is issued monthly by the U.S. Census Bureau and the U.S. Bureau of Economic Analysis of the U.S. Department of Commerce. It provides information on U.S. trade in goods and services (balance, exports, and imports) in specific commodities and end-use categories and with selected countries. The report also provides information on trade in advanced technology, petroleum, and motor vehicle products. The report is available from the U.S. Bureau of Economic Analysis at http://www.bea.gov/newsreleases/rels.htm . Under "International" click on latest news release. Information on trade in specific commodities, with particular regions, or for different time periods also can be obtained from the U.S. International Trade Commission at http://dataweb.usitc.gov/ (registration is free but required). Historical and current U.S. exchange rate data are available from the Federal Reserve Bank of St. Louis at http://research.stlouisfed.org/fred2/ . Information on foreign country holdings of U.S. Treasury securities are available at http://www.treasury.gov/tic/ .

Summary: The global financial crisis and the U.S. recession, during the 19 months from December 2007 through June 2009, caused the U.S. trade deficit to decrease, or lessen, from August 2008 through May 2009. Since then it has begun to increase again as recovery has commenced. The financial crisis caused U.S. imports to drop faster than U.S. exports, but that trend has reversed as U.S. demand for imports recovers. Exports of goods of $1,497 billion in 2011 increased from 2010 by $209 billion or 16%, while imports of goods of $2,236 billion in 2011 increased by $302 billion, also 16%, over 2010. Though both exports and imports increased by 16%, this led to an increase in the overall merchandise trade deficit (i.e., the trade balance became more negative) for 2011 of $93 billion or 15% over 2010. Because imports are greater than exports, exports must increase at a greater percentage than imports to maintain the current trade balance. In 2011, the trade deficit in goods reached $738 billion on a balance of payments (BoP) basis, still lower than the previous peak of $836 billion in 2006, but greater than the deficits in 2009 and 2010 of $506 billion and $645 billion. The 2011 U.S. deficit on merchandise trade (Census basis) with China was $295.4 billion, with the European Union (EU27) was $99.9 billion, with Canada was $34.5 billion, with Japan was $63.2 billion, and with Mexico was $64.5 billion. With the Asian Newly Industrialized Countries (Hong Kong, South Korea, Singapore, and Taiwan), the trade balance moved from a deficit of $5.5 billion in 2007 to surpluses increasing from $2.2 billion in 2008 to $15.4 billion in 2011. Related to the goods trade balance is the balance on the current account, which includes merchandise and services trade plus investment income and unilateral transfers. The deficit on the current account grew in 2011 to $466 billion from $442 billion in 2010. This smaller increase in the current account deficit ($24 billion), as compared to the increase in the goods trade deficit ($93 billion), reflects an increase in the U.S. surplus in both services trade and investment income. Trade deficits are a concern for Congress because they may generate trade friction and pressures for the government to do more to open foreign markets, to shield U.S. producers from foreign competition, or to assist U.S. industries to become more competitive. Overall U.S. trade deficits reflect excess spending (a shortage of savings) in the domestic economy and a reliance on capital imports to finance that shortfall. Capital inflows serve to offset the outflow of dollars used to pay for imports. Movements in the exchange rate help to balance trade. The rising trade deficit (when not matched by capital inflows) places downward pressure on the value of the dollar, which, in turn, helps to shrink the deficit by making U.S. exports cheaper and imports more expensive. However, interventions in foreign exchange markets by countries such as China and South Korea can keep the value of their currencies from rising too fast, thus keeping the dollar strong and imports cheaper. Areas to watch in 2012 in international trade include the energy and transportation sectors. In energy, unconventional oil and gas production are increasing U.S. domestic supply, reducing imports, and increasing exports. In transportation, U.S. automakers appear to be exporting well to growth markets such as China. Note: This report is current through U.S. Department of Commerce annual data revisions, published June 8, 2012, and Bureau of Economic Analysis revisions published June 14, 2012.