Why does the U.S. run a trade deficit to maintain the dollar?
The U.S. can eliminate its trade deficit or run the world’s dominant currency – but not both
Shrinking America’s yawning trade deficit is much harder than simply blocking imports and boosting exports—and will likely involve tough tradeoffs, according to Guggenheim Partners’ Scott Minerd.
“There is a reason why the United States has a structural trade deficit. That’s because the world wants to hold the dollar as a reserve currency,” said Minerd while speaking on a panel at the Milken Institute 2018 Global Conference in Los Angeles on April 30. “If we insist that we have no trade imbalance, what we’re saying is that we no longer want to be the reserve currency.”