But after the Americans initiated a swift climbdown on Greenland at Davos — no invasion or tariffs on disobedient Europeans — I wouldn’t be so dismissive. Perhaps Also Read | Europe has the weapons for Trump’s Greenland tariff warTrump’s attempt to bully allies into submitting to his territorial demands won’t be forgotten. As Christine Lagarde, the European Central Bank president, told CNN , it should be “a wakeup call” for the bloc to decide what it needs to do “to be strong by ourselves.” She’d been forc ...

WORKING PAPER 25-14 The US Trade Deficit and Foreign Borrowing How Long Can It Continue? Tamim Bayoumi and Joseph E. Gagnon July 2025 ABSTRACT The United States has run significant external deficits for half a century and the associated net international liabilities have been growing, especially recently. Yet, in contrast to earlier periods when the deficit was rising, few economists have expressed concerns about external sustainability lately. This paper explores the drivers and risks associated with the d ...