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When a country imports more than it exports - buying more from others than selling to them.
Why It Matters
The U.S. runs a massive trade deficit (~$800 billion/year) because Americans buy more foreign goods than they sell abroad. This isn't necessarily bad - it means we can consume more. But large deficits can weaken the dollar and become political flashpoints. Trade wars (like U.S.-China tariffs) directly impact companies that import or export.
Key Points
- U.S. has run a trade deficit every year since 1975
- Trade tensions can hurt multinational companies and cause market volatility
- A weaker dollar can actually help reduce the deficit over time
Related Terms
Common Questions
When a country imports more than it exports - buying more from others than selling to them. The U.S.
The U.S. runs a massive trade deficit (~$800 billion/year) because Americans buy more foreign goods than they sell abroad. This isn't necessarily bad - it means we can consume more. But large deficits can weaken the dollar and become political flashpoints. Trade wars (like U.S.-China tariffs) directly impact companies that import or export.
U.S. has run a trade deficit every year since 1975
Trade tensions can hurt multinational companies and cause market volatility
A weaker dollar can actually help reduce the deficit over time