What is a trade imbalance?  economics

1 Answer | Add Yours

pohnpei397's profile pic

pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted on

A trade imbalance exists when a nation's exports are much greater or much lower in value than its imports. Typically, we speak of the trade imbalance between two countries, when one country exports much more to the other than it imports from that country.

The balance of trade of a country can be defined as the difference between the value of the country's exports and the value of its imports.  A country, like the United States, which imports more than it exports is said to have a negative balance of trade or a trade deficit.  A country like China has a positive balance of trade.  Since the US imports much more from China than it exports to China, a trade imbalance exists between the two countries.

 

We’ve answered 318,958 questions. We can answer yours, too.

Ask a question