When a country’s imports surpass its exports during a certain time period, it has a trade imbalance. A negative trade balance is another term for it.
Different types of transactions can be used to compute the balance: commodities (sometimes known as “merchandise”), services, and goods and services. For foreign transactions, the current account, capital account, and financial account balances are also computed.
A trade deficit arises when an international transaction account has a negative net amount or balance. All economic transactions between residents and non-residents that result in a change in ownership are recorded in the balance of payments (international transaction accounts).