LARGE TRADE DEFICIT

Question

- Mexico also HAS A LARGE TRADE DEFICIT WITH China of more than twenty billion dollars.

- This means "The trade deficit of Mexico is 20 billion dollars higher than China's", right?

Thanks very much to Teachers,

Stevenukd

Avangi · Accepted Answer

The "deficit" would be the difference, or the shortage. Mexico buys more goods from China than China buys from Mexico, so you could say that on balance, money is flowing from Mexico into China. We say that China has a trade surplus with Mexico, and that Mexico has a trade deficit with China. It's not stated whether China has received the money or Mexico simply owes it. (I hope I have it right!) - A.

Edit. I think perhaps you're looking at it as the difference between what I owe you and what you owe me, that is, looking at the "deficit" as "what I owe." In that sense, you're thinking each country has a deficit, but one is greater than the other.

But I believe when we say "trade deficit," we're thinking in terms of the total value of the trading between the countries, paid or unpaid. In that sense, unless it were exactly equal, one side would always have a trade surplus, and the other would have a trade deficit. The country which shipped the greater value in goods would have the surplus.

LARGE TRADE DEFICIT

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