Trade surplus

When a country's exports exceed its imports, it is said to have a positive balance of trade, or trade surplus. The balance of trade is simply a country's exports minus its imports. The opposite of a trade surplus is, therefore, a trade deficit.

The balance of trade can be caused by several factors, including exchange rates, trade agreements, or the price of goods manufactured at home. For example, China's trade surplus with the United States has been increasing mainly because China prevents any substantial increase in the value of its currency. As a result, US imports from China are many times the value of US exports to China.

Try 6 free issues of MoneyWeek today

Get unparalleled financial insight, analysis and expert opinion you can profit from.

Start your trial

https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

MoneyWeek is written by a team of experienced and award-winning journalists, plus expert columnists. As well as daily digital news and features, MoneyWeek also publishes a weekly magazine, covering investing and personal finance. From share tips, pensions, gold to practical investment tips - we provide a round-up to help you make money and keep it.