If one was able to convert it directly to 1 USD immediately then yes it would be a super easy arbitrage and the price of Tether would never fluctuate from 1 USD

If one was able to convert it directly to 1 USD immediately then yes it would be a super easy arbitrage and the price of Tether would never fluctuate from 1 USD more than very small amounts (which would be arbitraged and restored) The problem is that you can't do that, and the pricing is indicating that the market no longer believes that Tether is worth 1 USD, so isn't willing to pay that much.