Martin Anota (@manota.bsky.social)

Tariffs, global imbalances, and the dollar While the Trump administration has offered multiple justifications for imposing tariffs, none has been as prominently cited as the goal of reducing trade deficits. This column contributes to the ongoing debate on the implications of global imbalances for trade policy, arguing that tariffs can close a persistent trade deficit if and only if they change the value of, or the returns on, the country’s international financial position. The authors also discuss whether it is optimal to increase tariffs when trade is imbalanced, and whether tariffs can account for the large depreciation of the dollar in the first half of 2025. https://cepr.org/voxeu/columns/tariffs-global-imbalances-and-dollar