Definition: The trade deficit is when the value of imports is greater than the value of exports.
Imports are defined as goods and services produced in a foreign country and bought by U.S. residents. It includes all goods that are shipped into the U.S., even if produced by an American company. If it crosses Customs and is intended to be sold in the U.S., it is an import.
Imports are also services that are produced in a foreign country and sold to a U.S. resident. This includes travel, fares and other passenger transportation, which is considered an import if, for example, a U.S. resident purchases transportation in another country as a traveler. This would include purchases of food, lodging, recreation and gifts while traveling overseas. A traveler is anyone who is in the country for less than a year. Other services that are considered imports include payment of royalties or license fees, and payment for services such as (to name just a few) advertising, telecommunications, or education. If the consumer is a U.S. resident, and the provider is a foreign resident, then it is an import.
An export is any good that passes through customs from the U.S. to be sold overseas. This includes merchandise shipped from a U.S. based company to its foreign affiliate or branch. (Source: BEA, A Guide to BEA Statistics on U.S. Multinational Companies.
An export is also any service that is paid for by a foreign resident to a U.S. resident or U.S. based business. It should be noted that the BEA estimates service imports and exports from benchmark surveys and other reports. The goods transactions are from the U.S. Census. (Source: BEA, Information Section)
Examples: The large U.S. trade deficit is one of the key economic issues in 2007.
