The trade balance is the total value of a country’s exports minus the total value of its imports.
When exports exceed imports, the country has a trade surplus. When imports exceed exports, it has a trade deficit. The calculation can cover goods, services, or both, depending on the statistic being reported. A goods-only balance is often called the merchandise trade balance.
The trade balance is one part of the current account, which also includes primary income such as interest and dividends and secondary income such as transfers. It is therefore not identical to the current-account balance. Nor does a trade deficit automatically mean an economy is losing money: imports can include capital equipment, while financial flows record how international transactions are financed.
Economists interpret trade figures alongside exchange rates, domestic demand, investment, saving, and income flows. A single month’s result can also be affected by seasonal shipments, commodity prices, or timing. The basic subtraction, however, remains straightforward and is reported in currency terms.