Jason Ma
3 min read
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Much attention has been focused on the U.S. current account deficit, or the imbalance between imports and export, but there’s another metric that’s poised to amplify market shocks. That’s the net international investment position, according to Kevin Ford, FX and macro strategist at Convera, who likens it to America’s financial scorecard with the rest of the world.
President Donald Trump’s trade war has focused much of Wall Street’s attention on the U.S. current account deficit, or the imbalance between imports and exports. But there’s another metric worth following that could worsen financial risks.
According to Kevin Ford, FX and macro strategist at Convera, the country’s net international investment position (NIIP) often gets overlooked.
It measures how much the U.S. owns abroad versus how much the world owns in the U.S., he said in a note last week, describing it as America’s financial scorecard with the rest of the world. And by that score, the U.S. is in the red by about $26 trillion, or nearly 80% of GDP.
“That means foreign investors hold way more American assets than Americans hold abroad,” Ford added. “It’s a setup that works fine when confidence is high, but in shaky times like 2025, it can become a pressure cooker.”
Indeed, times have been shaky. The U.S. Dollar Index is down 10% so far this year as the shock of Trump’s “Liberation Day” tariffs continues to reverberate, creating doubts about U.S. assets once deemed reliable safe havens.
In fact, the dollar’s year-to-date plunge is the worst since the U.S. transitioned to a free-floating exchange rate in 1973, effectively ending the post-World War II system of fixed rates under the Bretton Woods agreement.
Meanwhile, legislation that would add trillions of dollars to fiscal deficits is advancing in Congress, stirring more anxiety among foreign investors, especially those who hold U.S. debt.
Put it all together, and this year has been a textbook example of how a negative NIIP profile can magnify currency turmoil, Ford warned.
“And because so much of the capital propping up the U.S. financial system comes from abroad, even small shifts in sentiment can lead to big outflows,” he added. “That’s a lot of dollars being sold, and fewer being bought, and voilà, the greenback stumbles.”
Circling back to the financial scorecard analogy, Ford explained that the problem with focusing on the current account deficit is that it only shows the flow of transactions, i.e. imports versus exports.
