Services, like goods, can be traded. Unlike goods, however, the United States runs a trade surplus in services, meaning it exports more services than it imports. A large reason for that is the significant share of U.S. economic activity that services represent. As of 2017, services were responsible for 78 percent of U.S. gross domestic product, 82 percent of U.S. private sector full-time employment, and nearly $800 billion in exports.
Trade in services covers a wide variety of activities, from tourism and education to transportation and financial services. The expanding digital ecosystem and growth of global supply chains has increased the overall importance of services in the global economy. Physical goods require digital services for online purchases, transportation services for delivery, and logistics services throughout. Undergirding e-commerce are telecommunications services, the infrastructure of which was provided via a construction service. Financial services allow seamless purchases of goods and services at physical and online stores. Design services go into nearly every physical good, from the newest automobile model to food packaging. Cloud services provide access to data around the globe, regardless of where the data is stored. Data scientists can leverage that information for more efficient crop production or to generate targeted advertisements. Those are just some examples of how ubiquitous the services economy is, and how important services are to more physical aspects of the economy, like manufacturing and retail.
The United States holds an edge in providing those services, and more. When foreign citizens, companies, and governments, or U.S. companies operating abroad, pay for services provided U.S. companies, the United States generates services exports. Trade agreements can help foster services exports by reducing barriers to services trade, such as discriminatory domestic regulations or policies that inhibit the free flow of data across borders. The U.S.-Mexico-Canada Agreement sets strong standards in the digital trade and financial services spaces, and therefore is a positive signal that the Trump administration has not forgotten about the importance of services even as it proceeds with its quest to bring manufacturing jobs back to the United States.