“Preferential trade agreements (PTAs) are treaties that remove barriers to trade and set rules for international commerce between two countries or among a small group of countries. PTAs directly affect a country’s economy by altering its flows of trade and investment. Primarily through trade, PTAs indirectly affect other aspects of a country’s economy—such as productivity, output, and employment. As of August 2016, the United States had established 14 PTAs with 20 of its trading partners. This report surveys the economic literature on trade and PTAs and summarizes that literature’s findings on how trade and PTAs have affected the U.S. economy. How Does Trade Affect the U.S. Economy? International trade yields several benefits for the U.S. economy. Trade increases competition between foreign and domestic producers. That increase in competition causes the least productive U.S. businesses and industries to shrink; it also enables the most productive businesses and industries in the United States to expand to take advantage of profitable new opportunities to sell abroad and obtain cost savings from greater economies of scale. As a result, trade encourages a more efficient allocation of resources in the economy and raises the average productivity of businesses and industries in the United States. Through that increase in productivity, trade can boost economic output and workers’ average real (inflation-adjusted) wage. In addition, U.S. consumers and businesses benefit because trade lowers prices for some goods and services and increases the variety of products available for purchase…”