Where We Stand: The Fiscal, Economic, and Distributional Effects of All U.S. Tariffs Enacted in 2025 Through April 2
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Showing 114 database articles primarily about Savings Glut/Trade Deficit
How To Buy A Trade Surplus
Joseph Gagnon and Nishtha Agrawal Peterson Institute For International Economics- Date Posted:
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Using annual data for 146 countries from 1985 – 2024, Gagnon and Agrawal find that a $1 increase in a country’s cyclically adjusted fiscal deficit is associated with a 22–38¢ increase in its current-account deficit, with most of the estimates ~30¢.
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- The U.S. Trade Deficit: Myths and Realities — Obstfeld @PIIE argues that current account deficits have not been forcibly “imposed” on the US from abroad since 2002. Rejecting Pettis’ tax on capital flows…
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Honey, Who Shrunk the U.S. Income Surplus?
AI Summary. Foreign investors hold $69tn in U.S. assets against $41tn held abroad, creating a $15tn net liability gap that subtracts $150bn from U.S. investment income for every 1% rise in interest rates — 50% more sensitive than five years ago.
Matthew Higgins and Thomas Klitgaard Liberty Street Economics- Date Posted:
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The US net international investment position worsened by about $16tn between 2019 and 2025, driven by roughly $5.5tn in net inflows and $10tn in valuation losses, as higher rates hit a larger net liability stock, raising interest rate-sensitivity.
Is rising interest rates widening America's foreign investment income gap?
Core argument: The $28tn gap between foreign holdings of U.S. assets ($69tn) and U.S. foreign holdings ($41tn) drives mounting income payments abroad.
Foreign holdings of U.S. financial assets are immense, with official estimates putting their current market value at $69 trillion. U.S. holdings of foreign assets are also impressive but much smaller, at $41 trillion. The shortfall in U.S. foreign assets relative to foreign liabilities has been mounting for decades. Yet U.S. investment income receipts—in profits, dividends, and interest—comfortably exceeded income payments until recently. Payments on U.S. assets owned by foreign investors represent a servicing burden for the U.S. economy. Profits, dividends, and interest payments that would otherwise accrue to domestic investors instead flow abroad. Given the need to sell U.S. assets to finance ongoing trade deficits, this servicing burden seems likely to mount. The related buildup in the U.S. net liability position in interest-bearing assets will also make the income balance more sensitive to swings in interest rates. This increased sensitivity is already in evidence. At present, with the asset-liability gap at -$15 trillion, a 1 percentage point increase in U.S. and foreign interest rates would subtract $150 billion from the U.S. net income balance. (A 1pp fall in rates would result in a similar improvement.) Only five years ago, a 1 percentage point rise in rates would have subtracted $100 billion.Takeaways by Macro Roundup® AI
- The $28tn gap between foreign holdings of U.S. assets ($69tn) and U.S. foreign holdings ($41tn) drives mounting income payments abroad.
- A 1pp interest rate rise now subtracts $150bn from U.S. net income—50% more than five years ago—as the $15tn net.
- Ongoing trade deficits force asset sales to foreign investors, leading to larger servicing burdens and greater exposure to interest rate.
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- Tariffs and “International Payments Problems” — The worsening of the US net international investment position – from -20% of US GDP in 2010, to -53% pre-pandemic, and to -89% as of the end of 2025Q3…
- Foreigners Rebuff ‘Sell America’ and Buy a Net $1.6 Trillion in Assets — Foreign investors bought a net $1.55T of American long-term US financial assets in 2025, including $720B of net equity purchases and $409B in Treasury notes…
Don't Blame America's Current Account Deficit On the Dollar
AI Summary. The United States current account deficit is not required to supply the world with dollars, because foreign entities can acquire dollar assets by selling financial assets to Americans rather than goods, leaving the current account balance unchanged.
Maurice Obstfeld Peterson Institute for International Economics- Date Posted:
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Noting the minimal relationship between official liabilities and the CA, Obstfeld argues that the reserve currency role of the dollar is not the cause of the trade deficit. He urges reduction in the US fiscal deficit to increase national saving.
Is the current account deficit driven by dollar demand or asset sales?
Core argument: I cannot generate the requested takeaways because the source material contains no quantitative data, numerical findings, or comparative metrics. The.
Critics of the dollar's global role have argued that foreign official dollar purchases (labeled US incurrence of official liabilities in the figure) feed one-for-one into US current account deficits. To illustrate the true loose relationship between these two variables, the figure shows both of them over the 2003–25 period, as percentages of GDP. US net incurrence of liabilities to official holders, reported with a minus sign as in standard balance-of-payments methodology, is usually far too small to mirror the US current account deficit. And since roughly 2014, net official financial inflows have fluctuated around zero as the current account deficit has widened. To be sure, the strong international demand for dollars may make the dollar stronger against foreign currencies than it would be otherwise, [but] while they imply a smaller current account balance, they do not necessarily imply a negative balance and certainly not a rising negative balance, especially when foreign dollar reserve holdings have been shrinking relative to global economic activity (as figure 1 also implies). The euro is the world's second reserve currency, yet the euro area has a current account surplus. Britain had surpluses up until World War I despite issuing the world's premier global currency and hosting its leading financial center. Reducing the US fiscal deficit materially and sustainably is the most important US policy prerequisite for global current account rebalancing.Takeaways by Macro Roundup® AI
- I cannot generate the requested takeaways because the source material contains no quantitative data, numerical findings, or comparative metrics. The.
- To produce compliant takeaways, I would need data such as: current account deficit figures, dollar reserve holdings, asset sale volumes.
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- US Notches One of Its Biggest Annual Trade Gaps Since 1960 — The US trade deficit was $901.5B in 2025, effectively unchanged from 2024 despite the new tariff regime. The US bilateral deficit with China fell to $202B, the…
- The U.S. Trade Deficit: Myths and Realities — Obstfeld @PIIE argues that current account deficits have not been forcibly “imposed” on the US from abroad since 2002. Rejecting Pettis’ tax on capital flows…
- Pettis on Obstfeld — Responding to Maurice Obstfeld, @michaelxpettis argues that the chronic US current account deficit reflects deep and open US capital markets, which encourage…
Understanding Global Imbalances
AI Summary. Four economies—the United States, China, Germany, and Japan—account for roughly two-thirds of global imbalances, with current account surpluses and deficits now lasting twice as long as they did in the 1980s. Persistent imbalances have accumulated into large foreign asset and liability positions, with the United States holding net foreign liabilities
IMF Staff International Monetary Fund- Date Posted:
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As of 2024, the US, China, Germany, and Japan accounted for ~2/3 of total global imbalances (the sum of the absolute value of each economy’s current account deficit and surplus). The US CA deficit is between 0.8 and 1% of world GDP.
Core argument: Surplus durations have doubled since the 1980s, accumulating massive foreign asset positions for China, Germany, and Japan.
Four economies—the US, China, Germany, and Japan—account for roughly two-thirds of global imbalances. The US deficit—equivalent to 4% of GDP as of 2024—has been financed by capital inflows and portfolio investors seeking dollar assets. Germany and Japan’s surpluses have been driven by high saving rates, joined by substantial surpluses in China beginning in the 2000s. Oil-exporting countries’ surpluses fluctuate with commodity prices, creating episodic contributions to global imbalances. In earlier decades, surpluses and deficits were more cyclical: countries moved in and out of surplus depending on business cycles, commodity shocks, and exchange rate movements. While there is no standard definition of persistence, the average duration of a deficit or surplus spell roughly doubled since the 1980s. Persistent surpluses over the past two decades have accumulated into very large net foreign asset positions for economies such as China, Germany, and Japan, with each holding net foreign assets equivalent to 3–3.5% of global GDP in 2024. Similarly, persistent deficits have built up into large net liability positions, most notably in the US where the NIIP stands at about -25% of global GDP in 2024, underscoring the central role of the US position in global balances (Figure 6).Takeaways by Macro Roundup® AI
- Surplus durations have doubled since the 1980s, accumulating massive foreign asset positions for China, Germany, and Japan.
- Understanding Global Imbalances.
- Germany and Japan’s surpluses have been driven by high saving rates, joined by substantial surpluses in China beginning in the.
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China’s Cheap Money Is Shaking $9.5 Trillion Global Loan Market
Bloomberg Staff Bloomberg- Date Posted:
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China’s savings glut and “monetary easing to counter slowing growth” are manifesting themselves in credit expansion overseas, as bankers seek higher yields than they can get at home amidst deflationary pressure.
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Tariffs and "International Payments Problems"
Matt Klein The Overshoot- Date Posted:
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The worsening of the US net international investment position – from -20% of US GDP in 2010, to -53% pre-pandemic, and to -89% as of the end of 2025Q3 – reflects valuation gains on US stocks relative to stocks in the rest of the world.
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- United States’ Changing Net IIP — Net foreign claims on US assets are now 80% of US GDP, the most negative in history. @GeneralTheorist notes that this is partly a result of elevated U.S…