What is a 'Trade Deficit'?

A trade deficit occurs when a country's imports exceed its exports. It is an economic measure used in the field of international trade. A trade deficit is not necessarily detrimental, because it often corrects itself over time. However, a trade deficit may lead to fewer jobs. ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

Term of the Day | Words to Know Trade Deficit A trade deficit occurs when a country's imports exceed its exports during a given time period. It is also referred to as a negative balance of trade (BOT). The balance can be calculated on different categories of transactions: goods (a.k.a., "merchandise"), services, goods and services. Balances are also calculated for international transactions—current account, capital account, and financial account. Read More » Related to "Trade Deficit" Trade Deficit: Advantages and Disadvantages Is a trade deficit, also known as a current account deficit, beneficial or detrimental to a country's economy? What some economists see as drawbacks others view as benefits. Read More » Current Account Deficit vs. Trade Deficit: What's the Difference? The terms current account deficit and trade deficit are often used interchangeably, but they have substantially different meanings. Read More » SPONSORED BY FIDELITY INVESTMENTS When Others Step Back, Fidelity Steps Up Attracting the next generation of talented associates is a top priority for the Fidelity leadership team. Here's what they're doing to navigate the current crisis. Learn More » What Is the Balance of Payments? Learn about the balance of payments, and how it helps countries to track how much money is coming in and how much money is going out. Read More » Related Definitions Import An import is a good or service brought into one country from another and, along with exports, are components of international trade. Read More » Export The definition of export is goods produced in one country and shipped to another country for future sale or trade, adding to the producing nation's gross output. Read More » Balance of Trade The balance of trade is the difference between a country's import and export payments and is the largest component of a country's balance of payments. Read More » Trade Surplus A trade surplus is an economic measure of a positive balance of trade, where a country's exports exceed its imports. Read More » CONNECT WITH INVESTOPEDIA Email sent to: mondemand.forex@blogger.com To update your newsletter preferences or unsubscribe, click here. 114 West 41st St, floor 8 New York NY 10036 © 2020, Investopedia, LLC, All Rights Reserved | Privacy Policy