Martin Wolf (“The challenge of using excess global savings”, Opinion, May 14) is certainly right to assert that without macroeconomic rebalancing the US trade deficits will remain.
However, he omits to have added that with President Donald Trump’s tax cut proposals there is every prospect that, far from narrowing, the US trade deficit will widen.
According to the non-partisan Joint Committee on Taxation, if enacted, over the next decade Trump’s proposal to extend the 2017 Tax Cuts and Jobs Act and to eliminate income taxes on overtime pay and tips would add nearly $5tn to the US budget deficit.
In turn, that must be expected to cause a further widening in the US trade deficit by causing a deterioration in the US savings-investment imbalance.
It is to be regretted that the IMF is not banging the drum about the dangers that US budget policy recklessness poses to the balanced growth of international trade.
Desmond Lachman
American Enterprise Institute, Washington, DC, US
