Trade deficit calculation
Trade deficit. Conversely, if the balance of trade is negative (the value of exports are less than the value of imports) than the country is said to be running a trade deficit. If a country is running a trade deficit than this means that they must be borrowing money from the rest of the world to pay for their imports. When the opposite is true, a country has a trade surplus. For example, if the United States imported $1 trillion in goods and services last year, but exported only $750 billion in goods and services to other countries, then the United States had a trade balance of negative $250 billion , or a $250 billion trade deficit. A trade deficit is not necessarily a negative. If a country's economy is experiencing strong expansion, that country should import more goods to limit inflation. Balance of trade is often calculated as a percentage of a country's gross domestic product (GDP), and this calculation is relatively straightforward.