The US current account deficit can be funded by countries with large current-account surpluses coming from private sector investors in Japan and Europe, who have been pushed out of their domestic markets as a result of extensive quantitative easing programmes by their respective central banks.
But, as central banks start tapering their asset purchases and wind down their unconventional easing monetary policies, there is little prospect for increased demand. At the moment, markets seem to expect that the US President’s trade threats will be negotiated down in the end.