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2021-04-08

U.S. trade deficit — which has returned to its all-time high during the Covid pandemic

ought to give policymakers pause when it comes to trumpeting the virtues of a strong dollar.

This isn’t the first time the U.S. has reevaluated its strong-dollar policy. In 1985, faced with mounting trade deficits with Germany and Japan, the U.S. negotiated a managed reduction in the dollar’s value against those countries’ currencies. Following the Plaza Accord, the dollar plunged in value

President Joe Biden recently named economist Brad Setser — who has been a strong critic of countries that keep their currencies low against the dollar — to be the counselor to the U.S. trade representative.

Noah Smith 24 February 2021

https://www.bloomberg.com/opinion/articles/2021-02-24/a-weak-dollar-is-better-for-the-u-s-than-it-sounds


The merchandise-trade deficit rose about 3% to $88 billion, while the nation’s surplus in services trade fell to $16.9 billion, the smallest since 2012.

The U.S. goods trade shortfall with China widened in February to a three-month high of $30.3 billion on a seasonally adjusted basis.

Adjusted for inflation, the merchandise-trade gap widened to a record $99.1 billion in February from $96.1 billion.

https://www.bloomberg.com/news/articles/2021-04-07/u-s-trade-deficit-widened-to-record-71-1-billion-in-february


Plaza Accord

https://www.internetional.se/plaza.htm

Louvre Accord

An agreement reached in February 1987 by the five countries which comprise the G-5 (France, West Germany, Japan, the UK and US) following an earlier decision to correct an overvalued $US. They agreed that the $US had fallen sufficiently and that they would take steps to ensure stability in exchange rates.

https://www.armstrongeconomics.com/armstrongeconomics101/economics/louvre-accord-v-plaza-accord/






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