A trade balance measures the difference between a country's exports and imports over a specific period. If a country exports more than it imports, it has a trade surplus, while importing more than it exports results in a trade deficit. This balance is crucial for understanding a nation's economic health and its position in the global market. Trade balances can influence currency values and economic policies. A persistent trade deficit may lead to borrowing from other countries, while a trade surplus can strengthen a nation's currency. Policymakers often monitor trade balances to make informed decisions about tariffs, trade agreements, and economic strategies.