4/8  BIS central bankers' speeches  Indeed, simulation exercises conducted by the Bundesbank reveal that the tax cuts passed in the United States will probably push up government debt and the current account deficit considerably.4  6 The danger of protectionism I would like to warn against thinking of tariffs as a cure for the current account deficit.
By introducing new tariffs, the United States is actually running the risk of putting its own economy, not least, on a worse footing.5 This is because tariffs don’t just lead to lower imports; exports are also likely to take a hit due to depressed income in customer countries and appreciation of the dollar.