Ramesh lives in India. He makes lovely Channapatna wooden toys.
A toyseller from Russia wants to sell these toys in Russia. So, he places an order with Ramesh. Ramesh accepts the money and sends the toys to Russia.
When a country sends its products to another country, that is called Exporting. (Exit-from-port)
The things that are exported are simply called exports.
When a country buys from another country and brings those things into its ports, that is called Importing.
The things that are brought in called imports.
Just like things, sometimes services are also exported or imported. For example, you want to learn French. Your mom knows this lovely aunty who lives in France and teaches you French once a week. You pay her her fees online. In this case, the service of teaching is being exported by France, and imported by India.
As is easy to understand, trading that we do with foreign countries is called foreign trade.
What are Trade Deficit and Trade Surplus?
What do exports do? They help a country earn money.
Imports, on the other hand, cost money.
What happens at home, when you spend more money than you earn?
We have a deficit or a shortfall. It is exactly the same with foreign trade. When a country imports more than it exports, it has a Trade Deficit.
When it exports (earns) more than it imports(spends), it has a Trade Surplus.
That’s it!