The dollar is of course over-valued. The Federal Reserve’s broad dollar index reached a 17-year high in early June. The manufacturing trade deficit has ballooned to $900bn.
These imbalances have been made worse by Mr Trump’s own policies. His tax cuts at the top of the cycle have pushed the budget deficit to 4pc of GDP. They forced the Fed to jam on the brakes last year.
This ‘loose fiscal/tight money’ regime is the textbook formula for a strong currency. But the White House is not going to admit this. It is going to blame foreigners, and foreigners are not innocent either.
The eurozone is chief global parasite. It has been sucking demand out of the global economy with current account surpluses of €300bn to €400bn. China is a saint by comparison. This ‘free rider’ behaviour is the result of the euro structure and the austerity bias of the Stability Pact and German ideology amplified through currency union.
The rest of the world pays the price for euroland’s half-built experiment and its failure to stimulate, that is to say its failure to create a joint treasury with shared debt issuance that would make an investment revival possible in the depressed half of Europe.