Glossary · Economy
Trade balance
The trade balance is a country’s exports minus its imports; when it buys more from abroad than it sells, it runs a trade deficit.
Also called: trade deficit, balance of trade, net exports
Goods and services, Q3 2026: about 3.7% of GDP.
Deepest deficit: 6.0% of GDP, Q4 2005.
In plain words
Your family sells the cakes it bakes to the neighbors for $200 a month and buys $300 of their vegetables. Your “trade balance” with them is −$100: a deficit. For a country, add up everything it sells abroad (exports) and subtract everything it buys from abroad (imports): that is the trade balance.
It counts goods (cars, oil, phones) and services (tourism, software, shipping, banking). In Q3 2026 the US trade deficit ran at $1.22T a year, about 3.7% of GDP.
In the national accounts, the last US quarter with a surplus was Q3 1980. Countries such as Germany and China have run large surpluses for years.
Example
Where the dollars go
- Country A sells $100 billion of goods and services abroad and buys $130 billion: a trade deficit of $30 billion.
- The extra $30 billion paid to foreigners does not vanish: they use it to buy Country A’s bonds, shares, companies or property.
- So a trade deficit comes with an equal inflow of foreign money; a surplus country sends its extra savings abroad.
Economists see a trade deficit as the other side of a country investing more than it saves; whether that is a problem depends on what the borrowed money pays for.
One level deeper
By accounting, a country’s trade balance roughly equals its saving minus its investment: a country that invests more than it saves must import the difference. That is why government deficits, household saving and demand for the dollar shape the US trade balance as much as trade rules do.
In the GDP formula, imports are subtracted only because they were already counted in consumption and investment although they were made abroad. A big import bill does not by itself shrink GDP.
The deepest US deficit relative to the economy was 6.0% of GDP, in Q4 2005. A trade deficit can be harmless when foreigners want to invest in a country, and a risk when it is financed by short-term borrowing that can suddenly stop.
US trade balance since 1947, % of GDP
Net exports of goods and services as a share of GDP, quarter by quarter. Small surpluses were normal until the 1970s; deficits have been the rule since the early 1980s.
The numbers behind the chart
| Date | Net exports, % of GDP |
|---|---|
| Q1 1947 | 4.5% |
| Q4 1950 | −0.1% |
| Q4 1960 | 1.1% |
| Q4 1970 | 0.3% |
| Q4 1980 | −0.2% |
| Q4 1990 | −1.3% |
| Q4 2000 | −3.9% |
| Q4 2010 | −3.4% |
| Q4 2020 | −3.4% |
| Q4 2022 | −3.1% |
| Q4 2023 | −2.7% |
| Q4 2024 | −3.1% |
| Q4 2025 | −2.6% |
| Q3 2026 | −3.7% |
Why it matters
It links a country to the rest of the world: trade balances move exchange rates and flows of investment.
Large, lasting imbalances, deficits in some countries and surpluses in others, were one ingredient of the 2008 financial crisis, as surplus savings poured into debt markets.
It sits at the center of debates about tariffs and jobs, so it helps to know what it does and does not measure.
A common mistake
Myth: A trade deficit means a country is losing money to other countries.
In fact: Every dollar paid for imports buys goods or services, and the dollars that go abroad come back as investment in the country. A deficit means the country spends more than it produces and borrows or sells assets to cover the gap; whether that is a problem depends on what the money is used for.
Questions people ask
What is the US trade deficit?
In Q3 2026, net exports of goods and services were a deficit of $1.22T at an annual rate, about 3.7% of GDP (BEA).
What is the difference between the trade balance and the current account?
The current account adds income earned on investments abroad and transfers, such as money migrants send home. For the US the two are close; for countries with large foreign investments they can differ a lot.
When did the US last have a trade surplus?
In a single quarter of the national accounts, Q3 1980. On a yearly basis, the balance of goods and services has been in deficit every year since 1976.
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About the numbers
- The numbers on this page are recalculated from the data every night; the sources are listed at the end of the page.
- Gross domestic product (current dollars): U.S. Bureau of Economic Analysis, National Income and Product Accounts, Table 1.1.5, series GDP; retrieved from FRED, Federal Reserve Bank of St. Louis.
- US net exports of goods and services: U.S. Bureau of Economic Analysis, National Income and Product Accounts, Table 1.1.5, series NETEXP; retrieved from FRED, Federal Reserve Bank of St. Louis.
- This page explains a term. It is not investment advice.