The U.S. has a $282 billion trade surplus you’ve never heard of — and it’s at risk

When Caterpillar provides cloud-based equipment diagnostic services to a mining company in Australia, that’s digital trade. When Midwest farmers use John Deere’s AI-powered precision agriculture platform to sell precision-harvested grain to customers in Japan, that’s digital trade. And when people use Zoom to do business across borders — whether it’s Coursera serving students in India, Cleveland Clinic doctors providing cardiac care to patients in the Middle East, or American Woodmark selling U.S.-made cabinets to global customers — that’s digital trade.

Digital trade helps American companies and workers reach the 96 percent of the world’s consumers who live outside our borders. Our $282 billion trade surplus in digitally delivered services is testament to that. Counterintuitively, digital trade’s greatest impacts fall outside the tech sector entirely — in manufacturing, agriculture, health care, financial services, and entertainment. And it’s a game changer for small businesses, allowing them to advertise, execute payments, and manage customs clearance with the sophistication of large corporations. At a time when we are looking to increase affordability, boost manufacturing, and create good middle-class jobs, digital trade is a no-brainer.

It gets better. By reinforcing our economic strength, digital trade underwrites our technological leadership and enhances our national security. U.S. firms that do more business abroad can invest more in cutting-edge R&D at home — for example in advanced semiconductors, hypersonic materials, and synthetic biology. In addition, U.S. government support for digital trade helps prevent other governments from forcing American companies to share their valuable intellectual property (IP). Finally, cross-border data flows allow industry and government to better share information about — and thereby prevent — suspected terrorist financial activity, cyberattacks, or supply chain disruptions.

For decades, the United States was an unflinching champion for strong digital trade rules. This leadership helped U.S. companies compete in overseas markets, even as many governments pressed them to use local data centers or transfer their IP as a condition of doing business. In October 2023, however, the Biden Administration withdrew U.S. support at the World Trade Organization (WTO) for three core digital trade principles: (1) free cross-border data flows; (2) prohibitions on “data localization” requirements; and (3) protections against forced source code disclosure. This well-intentioned but shortsighted decision allowed many countries to further restrict digital trade.

The Trump Administration and Congress should take the following bold, bipartisan, and urgent steps to restore strong U.S. leadership on digital trade:

First, reassert U.S. leadership. The Administration should publicly re-adopt the longstanding U.S. position supporting core digital trade protections. Doing so would send a powerful message that the United States intends to write the rules of digital trade and stand by U.S. companies and workers as they compete internationally.

Second, take bipartisan Congressional action. Several Members of Congress have been staunchly bipartisan in pushing for strong digital trade rules. Representatives Suzan DelBene (D-WA) and Darin LaHood (R-IL) have co-chaired the House Digital Trade Caucus for years, working together to combat unfair digital trade practices. Senators Todd Young (R-IN), Chris Coons (D-DE), Jerry Moran (R-KS), and Michael Bennet (D-CO) recently introduced the Digital Trade Promotion Act, which would empower the President to negotiate high-standard digital trade agreements. Congress should move swiftly to pass this legislation and send it to the President’s desk.

Third, pursue “gold standard” digital trade agreements. The first Trump Administration made important progress on digital trade, concluding high-standard agreements with Japan, Canada, and Mexico. The second Trump Administration should move immediately to negotiate pacts with additional allies and partners, such as Australia, South Korea, and the United Kingdom.

Finally, combat unfair digital trade practices. The United States should more forcefully deter other countries from restricting digital trade. This includes threatening the use of U.S. trade laws to resist the digital services taxes (DSTs) that countries such as Canada, France, and India have imposed on U.S. tech firms. It also includes making the WTO “moratorium on customs duties on electronic transmissions” permanent, so that U.S. companies have certainty that their digital exports will not be taxed when they cross borders.

Digital trade is essential to our economic competitiveness, technological leadership, and national security. The time to reclaim U.S. leadership in setting the global agenda for it is now.

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