trade deficit

Examples of trade deficit in the following topics:

• Balance of Trade

  • Suppose the USA imported $1 billion worth of goods and services in 2008 and exported $750 million dollars worth of goods and services, then its trade deficit would be $1 billion minus $750 million, which equals a trade deficit of $250 million.
  • A positive balance is known as a "trade surplus," if it consists of exporting more than is imported; a negative balance is referred to as a "trade deficit" or, informally, a "trade gap."
  • The balance of trade is sometimes divided into a goods and a services balance.
  • Factors that can affect the balance of trade include:
  • In addition, the trade balance is likely to differ across the business cycle.

• Absolute Advantage and the Balance of Trade

  • Absolute advantage and balance of trade are two important aspects of international trade that affect countries and organizations.
  • Absolute advantage and balance of trade are two important aspects of international trade that affect countries and organizations .
  • A positive balance is known as a trade surplus if it consists of exporting more than is imported; a negative balance is referred to as a trade deficit or, informally, a trade gap.
  • The balance of trade is sometimes divided into a goods and a services balance.
  • The European Free Trade Agreement has helped countries international trade without worrying about absolute advantage and increases net exports.

• Exchange Rates

  • The "forex" or "FX" market is the largest currency exchange market in the world today, where trading averages around 5.3 trillion US dollars per day (data from April, 2013).
  • As a result, currencies become over-valued or under-valued, causing trade deficits or surpluses.

• Balance of Payments

  • Uses of funds, such as for imports or to invest in foreign countries, are recorded as negative or deficit items.
  • When all components of the BOP accounts are included, they must sum to zero with no overall surplus or deficit.
  • For example, if a country is importing more than it exports, its trade balance will be in deficit, but the shortfall will have to be counter-balanced in other ways – such as by funds earned from its foreign investments, by running down central bank reserves, or by receiving loans from other countries.
  • Imbalances in the latter sum can result in surplus countries accumulating wealth, while deficit nations become increasingly indebted.
  • There is said to be a balance of payments deficit (the balance of payments is said to be negative) if the former are less than the latter.

• Cash flow forecasts

  • If the cash flow forecast shows, for example, that you are in a deficit position two months out, you will have time to raise the necessary cash you need and avoid a sudden cash crisis.
  • Even if you have a retail business and a large percentage of your sales are cash, it is likely that you offer credit (charge accounts, charge cards, term payments, layaway, trade credit) to your customers.

• Technological Barriers

  • Standards-related trade measures, known in WTO parlance as technical barriers to trade play a critical role in shaping global trade.
  • As tariff barriers to industrial and agricultural trade have fallen, standards-related measures of this kind have emerged as a key concern.
  • These standards-related trade measures, known in World Trade Organization (WTO) parlance as "technical barriers to trade," play a critical role in shaping the flow of global trade.
  • But standards-related measures that are non-transparent, discriminatory, or otherwise unwarranted can act as significant barriers to U.S. trade.
  • Most countries are now part of the World Trade Organization.

• Economics

  • Trade barriers are government-induced restrictions on international trade, which generally decrease overall economic efficiency.
  • Trade barriers are government-induced restrictions on international trade.
  • Man-made trade barriers come in several forms, including:
  • Most trade barriers work on the same principle–the imposition of some sort of cost on trade that raises the price of the traded products.
  • If two or more nations repeatedly use trade barriers against each other, then a trade war results.

• The Argument Against Barriers

  • Most trade barriers work on the same principle: the imposition of some sort of cost on trade that raises the price of the traded products.
  • If two or more nations repeatedly use trade barriers against each other, then a trade war results
  • Trade barriers are often criticized for the effect they have on the developing world.
  • If international trade is economically enriching, imposing barriers to such exchanges will prevent the nation from fully realizing the economic gains from trade and must reduce welfare.
  • International trade is the exchange of goods and services across national borders.

• The North American Free Trade Agreement (NAFTA)

  • The North American Free Trade Agreement (NAFTA) is an agreement signed by the governments of Canada, Mexico, and the United States, creating a trilateral trade bloc in North America.
  • It superseded the Canada – United States Free Trade Agreement between the U.S. and Canada.
  • In terms of combined GDP of its members, the trade bloc is the largest in the world as of 2010.
  • The goal of NAFTA was to eliminate barriers to trade and investment among the U.S., Canada, and Mexico.
  • --Canada trade was already duty free.

• Trade Associations

  • A trade association, also known as an industry trade group, business association, or sector association, is an organization founded and funded by businesses that operate in a specific industry .
  • In addition, trade groups attempt to influence the activities of regulatory bodies.
  • The main media published by trade associations are as follows:
  • Industry trade groups sometimes produce advertisements, just as normal corporations do.
  • The Association of Master Upholsterers is an example of a trade association.