New Delhi, Aug. 26 -- I have previously argued that the US-China trade imbalance could not be resolved principally through tariffs: both countries needed to address the domestic policies underlying it. Recent developments reinforce that argument and show why the problem is increasingly global.

US gross national debt has crossed $40 trillion for the first time. Meanwhile, long-term yields have surged to their highest in nearly two decades, prompting the Treasury to increase buybacks of long-dated bonds. These can improve market liquidity but can't resolve the underlying fiscal problem.

Across the Pacific, China presents almost a mirror image. Its trade surpluses are exceptionally large, reflecting formidable export competitiveness but al...