Generally speaking, balance of trade occurs when the import and export of goods and services are almost equivalent. That means if a nation imports and exports goods equally, then their trade will be balanced. But if it fails to be at equilibrium, then the nation is at either deficit or surplus. When the amount of imports exceeds the amount of exports, the country or economy faces deficit. On the other hand, if the amount of exports crosses the amount of imports, then the country is experiencing surplus. In the US, for the last few months, especially December 2007, the economy faced an enormous trade deficit when the import exceeded export by $58.76 billion. In that month alone, the country imported almost $203.08 billion while it exported only $144.32 billion. Exports increased by almost 1.5% in December which is 13.6% above the previous year. Due to the downfall of US dollar, foreign buyers were interested in purchasing cheap American products. This led to an increase of exports of US products to overseas. A large trade deficit can have negative impact in the overall economy of a country. Thus, with more imports than exports, a nation will fall into trade deficit. In that sense, it is always better to export more than import, causing the economy to trade surplus.
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