U.S. Department of State, What It Does, How It Affects the Economy

How It Helps You Even If You Don't Travel

On September 29, 1789, President Washington appointed Thomas Jefferson of Virginia, then Minister to France, to be the first United States Secretary of State.[8] John Jay had been serving in as Secretary of Foreign Affairs as a holdover from the Confederation since before Washington had taken office and would continue in that capacity until Jefferson returned from Europe many months later.

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The U.S. Department of State is a federal agency that oversees America's international interactions. That includes official federal government initiatives, business relations, individual travel, and immigration. Its goal is to implement the president's foreign policy. It oversees the international activities of other federal departments. These include the Defense Department, Homeland Security, Central Intelligence Agency, and the United States Agency for International Development. It also advises the president on all international issues.

What the State Department Does

The State Department manages relationships with 180 out of the 191 countries with which the United States maintains diplomatic relations. It maintains 270 embassies, consulates, and missions around the world. It employs over 13,000 workers. Of these, over 9,000 Foreign Service workers live abroad as U.S. emissaries and ambassadors. The embassies employ 45,000 local workers. They represent America's interests and assist U.S. travelers in those countries.

It negotiates treaties and trade agreements. That includes the Transatlantic Trade and Investment Partnership, which would have been the world's largest. It's between the United States and the European Union. The State Department successfully negotiated the Trans-Pacific Partnership. It was awaiting ratification when President Trump withdrew the United States from it. The other participants moved forward anyway. 

Trump asked for $40.3 billion to fund the State Department in the FY 2019 budget. That amount includes $12 billion in overseas contingency operations. Those funds are for its participation in the fight against terrorism. The department can be considered part of defense spending since part of its mandate is to "shape and sustain a peaceful, prosperous, just, and democratic world." It works with foreign countries to cut funding for terrorist organizations. It supports local law-enforcement. It eliminates terrorist safe havens.

The State Department reports to Congress on human rights and religious freedom in almost 200 countries. The federal government uses the reports to guide decision making in matters ranging from assistance to asylum. China, Russia, Iran, and North Korea are of particular concern.

It also provides analyses of black market activities such a narcotics, human trafficking, money laundering, and terrorism. These activities are often perpetrated by global criminal organizations. There is a huge service industry that supports these organizations. They include providers of false documents and money launderers. They also include legal, financial, and accounting professionals. The State Department assists small countries combat these global organizations.

The State Department provides services, including passports, for citizens traveling and living abroad. It provides visas for foreigners visiting the United States.

It also provides expertise to U.S. businesses operating overseas. It identifies opportunities for them. It works to achieve fair business practices for U.S. firms. That includes intellectual property protection, intervening with local corruption and bribery, and promoting a climate for entrepreneurship.

Secretary of State

The secretary of state is the president's principal adviser on foreign policy. The secretary is the person chiefly responsible for U.S. representation abroad. He or she is the highest-ranking member of the president's Cabinet. The secretary is fourth in line of presidential succession after the vice-president, senate majority leader, and speaker of the house. 

The secretary sits on the National Security Council with the heads of the Department of Defense, the CIA, and Treasury Department. They coordinate international relations, intelligence, and defense under the president's supervision.


On May 19, 1789, James Madison proposed the creation of a Department of Foreign Affairs under the leadership of a Secretary of State for Foreign Affairs. At that time, John Jay was Secretary for Foreign Affairs. On September 29, 1789, President George Washington appointed Thomas Jefferson to be the first official Secretary of State. Jefferson, who had been Foreign Minister to France, began work on March 22, 1790.

Three Ways the States Department Affects You and the U.S. Economy

The State Department affects the U.S. economy in three critical ways. First, it negotiates trade agreements. These increase export opportunities for U.S. businesses by eliminating tariffs. Exports contributed $2.23 trillion in 2015. That's more than 10 percent of the nation's output. It boosts economic growth and creates jobs. For example, the North Atlantic Free Trade Agreement increased growth by 0.5 percent a year. As NAFTA is the largest free trade treaty in the world, its free trade agreement pros and cons greatly affect the U.S. economy, particularly in the area of U.S. imports and exports.

Second, the State Department reduces the economic volatility associated with terrorism. It promotes economic stability within other countries throughout the world. That makes it easier for U.S. companies to do business overseas.

Third, State Department issues passports. It provides assistance for travelers, such as tips for traveling abroad, country briefings, and travel warnings. You should register with the U.S. Embassy of the country you are visiting. If there is an emergency, the Embassy will contact and assist you in leaving. If you are a foreigner wishing to visit the United States, you need to apply for a visa for short stays.

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  1. U.S. Department of State. "Trafficking in Persons Report, June 2021."

  2. U.S. Department of State. "International Narcotics Control Strategy Report."

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