How to Calculate Trade Balance

by Michael Marz; Updated September 26, 2017

Calculating the trade balance gives you the net exports or imports between two countries. The balance of payments is an economic account that a country maintains to record the inflows and outflows of cash used to finance transactions between its residents and those of another country. The balance of trade, though, represents just exports and imports of goods and services.

Balance of Trade Calculation

To calculate a country's balance of trade, subtract the value of all goods and services it imports from a foreign country from the value of goods and services it exports to that same country. To illustrate, suppose the United States exports $100 million worth of goods and services to Canada, but only imports $60 million. In this case, the U.S. has a $40 million ($100 million – $60 million) trade surplus -- "favorable" is the technical term -- with Canada.

About the Author

Michael Marz has worked in the financial sector since 2002, specializing in wealth and estate planning. After spending six years working for a large investment bank and an accounting firm, Marz is now self-employed as a consultant, focusing on complex estate and gift tax compliance and planning.