Balance of trade.

In plain English

The balance of trade is the largest piece of the current account and is reported both for goods alone and for goods and services combined. A positive balance is a surplus, a negative one is a deficit. Exchange rates, relative growth rates, and consumer demand all move it, and a fast-growing economy often imports more simply because its households buy more. The goods balance and the services balance can point in opposite directions for the same country. Every trade deficit is matched by an offsetting inflow in the financial account, because the accounts must balance.

01Why it matters

The trade balance is one input into a currency's value and into the tariff debates that eventually show up in the prices you pay at the register.

02The math, step by step

Say a country exports $1,900 billion of goods and services and imports $2,400 billion. The balance is 1,900 minus 2,400, a deficit of $500 billion. If exports rose to $2,400 billion with imports unchanged, the balance would be zero.

Illustrative example. The amounts here are hypothetical, chosen to show how the math works, not real quoted rates or figures.

03What this is NOT

04Receipts

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