U.S. trade deficit  

The article highlights that trade deficit for United States increased in the month of February to almost a high of 9 ½  over last year  as record for both imports and exports set a new high record.  The gap of 1.6 % was shows the highest rise since Oct 2008 and was a continuation of a six month increase (CBNC News, 2018).  This also surpassed the forecast by economist, which had expected the gap to widen by $ 56.8 billion in the same month instead of $ 57.6 billion.  Part of the increase in this deficit was an indication of a rise in commodity prices (CBNC News, 2018).  Trade deficit has a big role to play in global markets especially in relation to emerging markets and economies that are export-driven.

Persistence in trade deficit presents some risks related to a reduction in purchasing power in the global economies, which also comprises of greater political risks.  The latter can be associated with a narrow trade surplus. The trade balance has an impact on the exchange rates of currencies since it affects demand and supply. The American dollar may become less attractive to buyers in countries that a firm wants to export to and this can greatly influence the export to that country (Argy, 2013). Any appreciation of the dollar would means the country targeted for export may be fewer dollars since the products exported are quite expensive.  The large trade deficit may indicate lack of competitiveness. The deficit figure can be reduced through policies related to supplies which can aim at improving productivity and the competitiveness of a given economy (Argy, 2013). This would the exports to increase as they become more attractive.

Reference

CBNC News, (2018).US trade deficit rises to near 9½-year high. Retrieved from: https://www.cnbc.com/2018/04/05/us-trade-deficit-rises.html

Argy, V. (2013). International macroeconomics: theory and policy. Routledge. 231-34