The March 11 editorial “Trade lessons” and Robert J. Samuelson’s March 11 op-ed, “Why the trade deficit is good news,” offered President Trump an up-to-date “lesson in the economics of trade.” Mammoth trade deficits are no longer immediate problems for the United States given the willingness of countries with large trade surpluses to amass big holdings of the U.S. dollar, which now functions as an international reserve currency. (In the old world of now-outmoded economic textbooks, these surpluses would have depreciated the value of the dollar, boosting U.S. exports, curtailing U.S. imports, restoring balance to its current account.)
Still, it’s worth looking at the possible longer-term consequences of this seemingly advantageous state of the affairs. Surely those big-surplus countries — China primary but not alone among them — aren’t just stashing their dollar hoards under their fiscal mattresses. Are they not using them to buy assets and influence in countries around the globe, including the United States? And what might be the results as those already massive acquisitions pile up in years to come?
Jodie T. Allen, Washington