New Delhi, April 16 -- Peter Navarro, senior trade adviser to US President Donald Trump, claimed last week that cumulative US trade deficits from 1976 to 2024 had transferred over $20 trillion of American wealth into foreign hands (Financial Times, 8 April). A quick calculation shows that the sum of US trade deficits over this period was, indeed, about $22.2 trillion. But how is this a wealth transfer? If the US imports goods by paying dollars, isn't it a transaction rather than a transfer?

Mr Navarro's point is best understood in terms of America's external balance sheet. To construct it, take all US entities-individuals, government and private enterprises-and add up what they owe (liabilities) and what they own (assets) relative to the...