A trade deficit is an economic condition where a country is importing more goods that it is exporting. It is also called as Net exports.
The deficit value is equal to the import value of the goods minus the value of the exported goods.
The value of the U.S. dollar will weaken if the US faces a trade deficit. However, the currency movements of the U.S. dollar can still be appreciated by other factors like the interest rates, government policies, inflation, and economic growth.
A trade deficit in the U.S. will lead to an outflow in the U.S. dollars and will make the foreign firms to end up with a lot of U.S. dollars, which they can use to but the US-based assets like treasury securities.
