Balanced Trade


DEFINITION of 'Balanced Trade'

A condition in which an economy runs neither a trade surplus or a trade deficit. Under a balanced trade scheme between two countries, each country will agree to purchase as many goods as it sells to the other. A country looking to achieve balanced trade may use tariffs or barriers to trade to ensure that other countries purchase its goods.

BREAKING DOWN 'Balanced Trade'

A balanced trade model is different than a free trade model, in which countries utilize their resources and comparative advantages to buy or sell as many goods and services as demand and supply allows. Achieving balanced trade may be difficult for countries that take part in international trade organizations, such as the World Trade Organization (WTO), as these organizations typically limit tariffs and trade barriers.

  1. Customs Barrier

    Any measure designed to limit international trade. A customs ...
  2. Tariff War

    An economic battle between two countries in which Country A raises ...
  3. Import Duty

    A tax collected on imports and some exports by the customs authorities ...
  4. World Trade Organization - WTO

    An international organization dealing with the global rules of ...
  5. Nontariff Barrier

    A form of restrictive trade where barriers to trade are set up ...
  6. Protectionism

    Government actions and policies that restrict or restrain international ...
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