Steffen Murau in Phenomenal World:
One year into Donald Trump’s second term, the global economic order is being given a facelift that wouldn’t look out of place at his Mar-a-Lago beach club. The President has turned his famous penchant for tariffs—“the most beautiful word in the English language”—into an agenda for national rejuvenation, imposing them on allies and enemies alike. Stunned commentators have made various attempts to interpret the sweeping trade restrictions: as a break with the US role in superintending world capitalism, a tool to bully individual states into signing favorable deals, or a mindless assertion of raw power. Yet there is still no consensus about either the nature of this shift or its long-term implications.
Some have sought answers in the work of Trump’s former economic adviser Stephen Miran, now member of the Federal Reserve’s board of governors, whose policy document A User’s Guide to Restructuring the Global Trading System was published in the runup to the 2024 election. The paper appears to explain the logic behind many of the decisions which have played out since, calling for a “generational change” to “put American industry on fairer grounds vis-à-vis the rest of the world,” with tariffs the primary vehicle. The dollar’s strength for the past half century, writes Miran, has made US exports too expensive for the rest of the world to buy, while making imports too cheap for American consumers to pass up. The result has been the degradation of American manufacturing and industrial output. “Persistent dollar overvaluation” is said to flow from the way in which “dollar assets function as the world’s reserve currency.” It is simply too burdensome for the US to “finance the provision of reserve assets and the defense umbrella, as the manufacturing and tradeable sectors bear the brunt of the costs.”
Miran is not alone in arguing for the dollar’s devaluation.
More here.
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