As Trump scrambles to reassemble his signature policy, resuming his decades-long obsession with trade, some observers argue that he has conflated America’s trade problems with a very different kind of crisis.
If the U.S. were to lose investor confidence abroad, then foreign exchange reserves might run dry and the country would no longer be able to service its international debt. That outcome, known as a balance-of-payments crisis, would be an enormously more challenging problem than a long-running trade deficit, Gopinath said.
“The difference is similar to suffering from chronically high cholesterol versus having a heart attack,” she wrote, adding that right now, the U.S. is dealing with “high cholesterol but not a heart attack.”
“A 150-day tariff cannot reduce persistent trade deficits, and the U.S. is not having a heart attack,” she wrote.
