The United States is in the midst of the most consequential rethinking of its foreign policy since the end of the Cold War. Although Washington remains bitterly divided on most issues, there is a growing consensus that the era of engagement with China has come to an unceremonious close.
Taxing capital inflows is a far better way to balance trade than imposing tariffs. This would address the root causes of trade imbalances, improve the productive investment process, and shift most of the adjustment costs onto banks and speculators.
The messages Trump is sending make negotiations with Tehran less and less likely and increase the chance of another ruinous war of choice in the Middle East.
Facebook seems to think its new digital currency Libra will be used mainly for purchasing goods and services and for current account transactions. But it will probably be used mainly for capital account transactions. Do we really want to eliminate frictional costs on the capital account?
Income inequality in the United States hampers growth and forces up debt. In advanced economies in which investment is not constrained by scarce savings, high levels of income inequality lead automatically to either more unemployment or more debt. Such inequality undermines not only the health of the economy, but eventually also the rich.
A number of recent articles suggest that Chinese officials may reduce their purchases of U.S. government bonds. It is very unlikely that China can do so in any meaningful way because doing so would almost certainly be costly for Beijing. And even if China took this step, it would have either no impact or a positive impact on the U.S. economy.
Withdrawing waivers for civil nuclear cooperation may sound less aggressive than steps like the overhyped Guard Corps designation, but it is one of the most dangerous steps the administration has left.
Without access to the same coercive tools controlled by the White House, Congress is forced to look for other ways to exert control over foreign policy toward Russia.
U.S. partners forced by proximity to rub elbows with the IRGC might worry that unavoidable contacts could make them subject to U.S. sanctions.
Many in Congress have come to the conclusion that tougher sanctions on Russia are in order. Their activism can serve as a useful check on the Trump administration but, ideally, should not undermine unity with key U.S. allies.