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What is the trade deficit

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What is the trade deficit and why is it considered so important? What are some factors that impact the numbers? What do you think it means? Please provide references and not anything from Wikipedia

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Hi there,

Here is some information for you regarding trade deficits:

Trade Deficit
Annual amount spent by U.S. individuals, companies, and government agencies on foreign-made products, minus the amount spent by foreign entities on U.S.-made products; accounting for about negative 2% of the GDP.

Note the "negative" in the last line: by definition, the trade deficit is subtracted as an adjustment factor. That's because the other three factors in GDP measure "products made anywhere, bought by Americans"; by subtracting the trade deficit you're left with "products made in the U.S., bought by anybody".

source: http://www.moneychimp.com/glossary/trade_deficit.htm

Another source discussing balance of payments:

balance of trade, relation between the merchandise exports and imports of a country. The concept first became important in the ...

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