In what is probably a positive aspect of the recent weakening of the US dollar, the trade deficit is now dropping.
Record Exports Help Push Trade Deficit to Lowest Level in 7 Months
The U.S. trade deficit fell to the lowest level in seven months, helped by record-high sales of American products and the declining value of the dollar. The deficit with China declined as imports edged down slightly following a string of high-profile recalls.

The Commerce Department reported Thursday that the deficit declined to $57.6 billion in August, down 2.4 percent from the July imbalance. It was lowest gap between exports and imports since January and a much better showing than had been expected.

The improvement reflected a 0.4 percent rise in exports, which climbed to a record $138.3 billion. Sales of farm products including wheat, soybeans and corn, and exports of industrial products such as chemicals and steel both hit record levels.

Imports actually dropped by 0.4 percent to $195.9 billion, reflecting lower shipments of foreign cars and furniture, which offset a big increase in the foreign oil bill, which rose to the highest level in a year.

In other economic news, the Labor Department said that the number of newly laid off workers filing claims for unemployment benefits fell by 12,000 last week to 308,000. That was a better showing than had been expected.

The politically sensitive trade deficit with China fell by 5.3 percent to $22.5 billion. U.S. exports were up, led by increased sales of aircraft and soybeans, while imports slipped a slight 0.7 percent. The decline in imports occurred after a series of recalls of tainted products from toys with lead paint to toothpaste and unsafe tires.

However, the small drop came in such areas as computers and furniture, where there have not been highly publicized recalls. Imports of toys from China actually rose as American retailers stocked their shelves for Christmas.

The boom in U.S. exports is helping to cushion the U.S. economy from the adverse effects of the housing bust and a severe credit crunch. Overseas demand for U.S. goods is being helped by a falling value of the dollar against many other currencies. That development pushes up the cost of foreign vacations and imports for American consumers but makes U.S. products cheaper in foreign markets.

For August, America's foreign oil bill rose by 0.8 percent to $27.5 billion, the highest level since last August. The average price for a barrel of imported crude oil jumped to a record high of $68.09. Analysts are predicting that figure will climb higher in coming months given that oil prices have recently hit all-time highs above $80 per barrel.

America's trade deficit with Mexico jumped 23.6 percent to a record of $6.9 billion while the deficit with Canada, the country's biggest trading partner, edged down 6.6 percent to $5.3 billion. The deficit with the European Union fell by 21.1 percent to $10.2 billion while the imbalance with Japan dropped 16 percent to $6.7 billion. http://biz.yahoo.com/ap/071011/economy.html?.v=2

That's nice but trade will be going to shit entirely when Bush finally forces passports/extra controls at the Canada U.S border. I suppose to some, less trade across the board is better than a trade deficit.

It's a bit of a mixed bag. an individual can say that they were responsible and spent less money on 'stuff' at the store last month. If the money was 'saved' and put in the pocket then it can be a positive. If, however, the individual is a carpenter and spent less on 'stuff' at the store such as lumber, etc. then it can mean he has less work available or less capital to buy supplies. An improved trade deficit can be similar to either. sometimes a positive because of increased production, efficiency, lower costs, etc. and sometimes because of a negative such as economic slow down, less purchasing power, etc.
Here's how it impacts an individual. You go into Walmart with a $100 you earned that day. Your son needs a 'necessity' such pair of shoes. They are made in China and cost $20. You have $80 left to do something else with and thus put money into housing, a new car, go to a movie, buy beer, a pizza, etc....things produced in the USA. If, however, you go into Walmart and that same pair of shoes, because of a drop in US currency now costs $30 it leaves you with only $70 to spend elsewhere. $10 of spending power has been removed from the domestic economic infrastructure. Multiply this individual by 300 million Americans and it has a dramatic impact on the economy.

The subsidies for the agricultural stuff should be discounted from the trade balance offset.

And if we want to use the number as a clue to the health of the US economy, we should also discount for the drop in Chinese imports in temporary reaction to the various poisonings and adulterants.