Americans last focused sustained political attention on the trade deficit in the 1980s. A crisis strikingly similar to today’s—a collapsing industrial base, bipartisan fury in Congress, and a soaring dollar—produced the most consequential episode of international currency coordination in modern history. The Plaza Accord of 1985 and the diplomatic campaign that surrounded it succeeded in rapidly reversing the trade deficit. But the success did not last. The political coalition that forced action dissolved, the institutional memory faded, and the structural forces that produced the crisis were left largely intact, setting the stage for the even deeper imbalances we confront today…

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