Under what conditions will a larger budget deficit cause a trade deficit?  

A larger budget deficit will likely cause a trade deficit if the private savings don't counteract the public spending and crowding out of the private investment is not fully attained. For instance, if the private investment has grown immensely, the government seeks to employ policies such as; increased interest rates and taxes. It is a measure to enhance public spending to dampen the private sector. However, more government spending only results in a more significant federal budget deficit and debt from borrowing that causes harm to economic growth. According to economists, the significant growth of both the budget deficit and trade deficit in the 1980s earned them the name twin deficits. The two deficits moved together. Fundamentally, a trade deficit is a result of a country's imports exceeding exports.