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Decreasing the trade deficit helps the country because it means that we are gaining money as we export. If the citizens or the government reduce
Decreasing the trade deficit helps the country because it means that we are gaining money as we export. If the citizens or the government reduce consumption, imports will drop and less borrowing will be needed to pay for consumption. The consumption taxes could help reduce the deficit, by discouraging consumption, increasing saving, and reducing the government deficit. Trade deficit reversals are caused by a significant exchange rate depreciation. A weaker dollar makes imports more expensive and exports cheaper and improves the trade balance, it tends to run stronger than other currencies
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