Legal Definitions - trade gap

A trade gap, also known as a trade deficit, occurs when a country imports more goods and services than it exports. This means that the country is spending more money on imports than it is earning from exports.

For example, if the United States imports $500 billion worth of goods and services from China, but only exports $200 billion worth of goods and services to China, there is a trade gap of $300 billion between the two countries.

This trade gap can have negative effects on a country's economy, as it can lead to a decrease in jobs and wages for workers in industries that are being outcompeted by cheaper imports. It can also lead to a decrease in the value of a country's currency, making imports more expensive and exports cheaper.