Balance of trade

The difference between a country’s exports and imports over a period. It is commonly measured for goods alone or for goods and services together.

Exports: Goods and services produced domestically and sold to buyers abroad. Exports enter the balance as sales to the rest of the world.
Trade surplus: A period in which a country’s measured exports exceed its imports. It is the positive outcome of the balance calculation.
Exchange rate: The price of one currency expressed in another currency. Currency movements can alter export prices, import costs, and the measured trade balance.
Net exports: Exports minus imports, used as a component of aggregate expenditure in national accounts. It is closely related, but its accounting role differs from a trade-balance statistic.
Imports: Goods and services bought from foreign producers by domestic residents or businesses. Imports are subtracted from exports to calculate the balance.
Trade deficit: A period in which a country’s measured imports exceed its exports. It is the negative outcome of the balance calculation.
Tariff: A tax imposed on imported goods. Tariffs are often proposed as a way to reduce imports and narrow a deficit.
Trade-to-GDP ratio: The sum of exports and imports divided by gross domestic product. It measures openness, not whether exports exceed imports.
Merchandise trade: International trade in physical goods, excluding services. Many published trade balances cover merchandise rather than all cross-border transactions.
Balance of payments: A record of a country’s economic transactions with the rest of the world. The trade balance is one component of this broader international accounting framework.

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