Report
The implications of a rebalancing of US foreign trade without an increase in the US savings rate
Donald Trump wants to wipe out the United States’ external deficit , but without this rebalancing coming from an increase in the US savings rate (on the contrary , since there is going to be an increase in the fiscal deficit ). The rebalancing of US foreign trade could therefore only stem from a fall in the savings rate of the rest of the world ( outside the United States), especially in the regions with significant external surpluses with the United States (China, European Union). The result would therefore be a fall in the global savings rate, leading , at equilibrium , to higher interest rates and to a lower global investment rate, eventually resulting in a loss of long- term global growth , which is of course negative . If the US external deficit is to be corrected, the cooperative solution would involve both an increase in US savings and a reduction in the rest of the world’s savings, without any change to the global savings rate.
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Natixis
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Patrick Artus
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