Trade, Jobs, and Wages

			What are the benefits and costs of trade expansion? What is the relationship between trade and foreign direct investment? Trade and investment flows are complements, and foreign direct investment (FDI) is considered to be a major driver of trade. Key Trade Terms and Principles

			What is most-favored-nation (MFN) treatment? U.S. Trade Trends53

		The Role of Trade in the U.S. and Global Economy54

			How important is trade to the global economy? The growth of global value chains, intra-firm trade, and trade in intermediate goods has made it increasingly difficult to interpret the implications of trade data for the U.S. economy. Some policymakers view the size of U.S. bilateral trade deficits with certain countries—such as China, the largest single source of the U.S. overall trade deficit—as an indicator that the trade relationship is "unfair" and the result of market-distorting trade policies, such as trade barriers, subsidies, and discriminatory regulations. Trade policies are generally not viewed as the most effective policy tools for affecting the overall trade balance. Sector-Specific Issues in U.S. Trade

			How important are manufactured goods in U.S. trade? Formulation of U.S. Trade Policy

		Trade Policy Objectives and Functions

			What have been the overall objectives of U.S. trade policy? Historically, U.S. trade policy has focused on supporting economic growth and jobs through trade, liberalizing markets by reducing trade and investment barriers through trade agreements and negotiations, enforcing trade commitments and related laws, and providing time-limited relief to companies and workers facing unfair or injurious import competition. Another key objective of U.S. trade policy has been to advance U.S. strategic goals by supporting economic development and integration of developing countries, strengthening regional alliances, and extending U.S. influence abroad. U.S. administrations outline key trade policy objectives in an annual trade policy agenda established by the U.S. Trade Representative (USTR). What are the key functions of U.S. trade policy? Key trade functions of the U.S. government include formulating and coordinating trade policy; negotiating trade and investment agreements; enforcing U.S. trade laws and U.S. rights under trade agreements; and administering trade and investment programs, such as export financing, import inspection and safety, and trade adjustment assistance. Congress plays a major role in U.S. trade policy through its legislative and oversight authority, working together with the executive branch to negotiate and implement trade agreements. These include laws authorizing trade programs and governing trade policy generally in areas such as tariffs, nontariff barriers, trade remedies, and import and export policies, as well as trade policy functions of the federal government. Congress created the USTR in 1962 (originally the Office of the Special Representative for Trade Negotiations) to heighten the profile of trade and provide better balance between competing domestic and international interests in the formulation and implementation of U.S. trade policy and negotiations, previously managed by the State Department. The role of the private sector and other stakeholders in the formulation of U.S. trade policy is embodied in a three-tiered committee system that Congress established in Section 135 of the Trade Act of 1974, as amended. U.S. Trade Policy Tools119

		Trade Negotiations and Agreements

			Why does the United States negotiate trade liberalizing agreements? Following World War II, the United States encouraged tariff reduction globally by supporting a rules-based trading system under the GATT and the WTO. Link Between International Investment and Trade159

		What are the main kinds of capital flows? It depends. What are the benefits of FDI? What is the Committee on Foreign Investment in the United States (CFIUS)?
Congress plays a major role in U.S. trade policy through its legislative and oversight authority. Since the end of World War II, U.S. trade policy has focused on fostering an open, rules-based global trading system, liberalizing markets by reducing trade and investment barriers through negotiations and agreements, and enforcing trade commitments and related laws. International trade and investment issues can affect the overall health of the U.S. economy and specific sectors, the success of U.S. businesses, U.S. employment opportunities, and the overall standard of living of Americans. The benefits and costs of international trade and the future direction of trade policy are active areas of interest for many in Congress.
This report addresses frequently asked questions regarding U.S. trade policy and is intended to assist Members and staff who may be new to trade issues. The report provides context for basic trade concepts and data on key U.S. trade and investment trends. It also addresses how U.S. trade policy is formulated and describes the trade and investment policy tools used to advance U.S. objectives. The report is divided into five sections:
The Basics of Trade explains key economic concepts, including why countries trade, the benefits and costs of trade expansion, and the role of global value chains in international trade. The section also highlights common trade terms and principles.
U.S. Trade Trends provides data on key U.S. trade relationships, the U.S. trade deficit, and sector-specific issues related to manufacturing, agriculture, services, and digital trade.
Formulation of U.S. Trade Policy describes key objectives and functions of trade policy. The section outlines the roles of Congress, the executive branch, private stakeholders, and the judiciary in the formulation and implementation of U.S. trade policy.
U.S. Trade Policy Tools explains some of the key vehicles for advancing U.S. trade policy objectives, including trade negotiations and agreements, special trade programs, tariff policy and trade remedies, trade adjustment assistance, and export promotion programs and controls.
Link Between International Investment and Trade explains the motivations of foreign direct investment (FDI) and its relationship to trade. The section provides data on top sources of FDI in the United States as well as destinations of U.S. FDI abroad, and explains the role of investment agreements and the Committee on Foreign Investment in the United States (CFIUS).
This report is intended as an introduction to U.S. trade policy and does not provide in-depth coverage of all trade and investment issues. For more detail on U.S. trade policy issues, refer to the following CRS products:
CRS Report R45474, International Trade and Finance: Overview and Issues for the 116th Congress, coordinated by Rebecca M. Nelson and Andres B. Schwarzenberg. CRS Report R45420, U.S. Trade Trends and Developments, by Andres B. Schwarzenberg. CRS Report R44546, The Economic Effects of Trade: Overview and Policy Challenges, by James K. Jackson. CRS Report R45243, Trade Deficits and U.S. Trade Policy, by James K. Jackson. CRS In Focus IF10156, U.S. Trade Policy: Background and Current Issues, by Shayerah Ilias Akhtar, Ian F. Fergusson, and Brock R. Williams. CRS In Focus IF11016, U.S. Trade Policy Functions: Who Does What?, by Shayerah Ilias Akhtar.