Could this moment be a prelude to Trump's Pyrrhic victory on the US current deficit?
As every textbook teaches us, the current account deficit is equal to the financial account surplus. The US has a current account deficit in part because its assets (treasuries, private debt and equity) are attractive to foreigners – largely because of their safety and liquidity.
Trump’s tariffs, attacks on allies and NATO, and policies shaking the core of US institutions will make US assets less safe, more uncertain and less attractive.
Apr 8, 2025 16:16When that happens, the US financial account will start worsening and the current account will have to improve.
A victory for Trump!
