When I try to talk to the settlers the interaction automatically goes into trade every time. Has anyone else experienced this and is there a fix?

If you're talking about settlers that's basically all they can do unless they are running a shop. If you are trying to assign a job you need to be in build mode.

What about the people in sanctuary? Is trade all they can do?

You may have a few more options with the people with names, but people marked "Settler" really don't have other options unless the run a shop.