Effects of Altering the Structure of U.S. Trade

Abstract

The success of U.S. policies designed to promote international economic and trade growth since the end of World War II has changed the U.S. position in the global economy. The likely continued expansion of the global economy will continue to alter the international position of the United States.' Also, new technologies that make economic activity highly mobile across national boundaries will tend to increase in national economies.2 A growing and changing global economy potentially expands export opportunities for the United States, but it also changes imports. Both effects have the potential to accelerate structural adjustments in the United States and in other nations. We address two adjustment issues the United States faces as a global trading partner. One is the changing relative importance of other countries as U.S. trading partners. Over the 1960-83 period U.S. trade has grown rapidly, while its share of global trade has declined from 16% to 11%. Competition has increased in a growing world market. Developing country exports have increased from 22% to 25% of world exports; newly industrialized country (NICs) exports from 9% to 13% (Preeg, table A-2). A similar analysis could be made for imports with the same conclusion: the United States faces an increasing opportunity to expand its trade with an increasing number of global trading partners, but its export and import-substitution industries also face increasing international competition. In this changing global market, who the United States trades with may change, leading to a change in the structure of export demand for U.S. commodities and import supply to the United States.