Miran, a supporter of the Liberation Day tariffs, argues that the dollar’s reserve status causes persistent currency distortions, making US goods less competitive and contributing to unsustainable trade deficits. “As global GDP grows, it becomes increasingly burdensome for the US to finance the provision of reserve assets and the defence umbrella, as the manufacturing and tradeable sectors bear the brunt of the costs,” Miran writes.
The volatility in the 80-year-old global order caused by the Trump administration is leading the world to question the primacy of the US dollar (USD) and investors are turning increasingly into a centuries-old store of value — gold.
In a report dated May 26, David A Meier, economist at Julius Baer, suggests the longer-term US dollar outlook is driven to a lesser extent by trade policy, but more by the view of one man, Stephen Miran, the chairman of Trump’s Council of Economic Advisers. It remains possible that policymaking at a later stage could go down the avenue of more drastic measures to reduce imbalances, as suggested by Miran’s paper, “A User’s Guide to Restructuring the Global Trading System”, says Meier.
