Though often viewed as blunt, outdated, and inflationary instruments, tariffs may offer the United States a strategic path forward. As Stephen Miran, Chairman of Trump’s Council of Economic Advisors, argues, tariffs—if used correctly—can help restructure the global trading system, rebalance fiscal policy, and preserve American competitiveness.
The Harvard-trained economist and former senior Treasury advisor penned a trailblazing November 2024 essay titled “A User’s Guide to Restructuring the Global Trading System”, in which he argues that tariffs, when combined with strategic policy can be noninflationary and revenue- generating tools that advance US interests.
In the paper, which has largely flown under the radar, Miran presents a view in which America’s vast trade deficits, manufacturing decline, and fiscal imbalance are the expected consequences of America’s role as the issuer of the world’s reserve currency. This arrangement requires the U.S. to run “twin defects”- by issuing vast quantities dollar-denominated assets like Treasuries and simultaneously becoming a net-importer to supply the world with dollars needed for global transactions.
Miran says this is situation is known as the Triffin dilemma. Named for the Belgian-American economist Robert Triffin, it highlights how the benefits of reserve currency status are counterbalanced by deteriorating the industrial base, and the inflated price of the reserve currency. A high priced, inelastic dollar hinders the U.S ability to adjust to trade and fiscal imbalances.
Miran supports his case by pointing to the first Trump administration which enacted sizable tariffs on China. He notes that despite the large increase in tariffs, there was no increase in inflation — largely because the Chinese renminbi declined in response, negating the price impacts on US consumers. In Miran’s analysis China bore the real cost of tariffs through reduced purchasing power and diminished profit margins for Chinese exporters.
But Miran takes it even further: he sees tariffs not just as protectionist tools, but as a tool for rebalancing global burden-sharing. He asserts that the United States subsidizes the global order by issuing reserve assets, incurring large trade deficits, and providing global security. He contends that tariffs, when rules-based and gradually escalated, can shift some of the fiscal and geopolitical burden back onto others.
Both Miran and Treasury Secretary Scott Bessent have advocated for a rules-based tariff system wherein countries’ trade actions, currency policies, and security cooperation dictate the tariff rate assigned. In this model, tariffs are not merely economic levers, but diplomatic ones. States that undercut U.S. manufacturing by manipulating their currency value and neglect their security commitments would be subjected to elevated trade barriers while allies would enjoy preferential rates. The underlying message is clear: access to the U.S. consumer market is a privilege, not an entitlement.
To support domestic competitiveness Miran argues replacing some domestic taxation with tariffs to alleviate the burden placed on U.S. labor and capital. Coupled with domestic deregulation and corporate tax relief, could help reduce the fiscal deficit while revitalizing domestic industry.
Overall, Miran’s approach to tariffs isn’t about igniting a trade war, rather, its about realigning global economics with U.S interests. The old model where the U.S. ran endless deficits may no longer serve the county. Tariffs, then, should be seen as the starting point for a realignment of global economics and diplomacy.
Though many still see tariffs as universally harmful, Miran presents a thoughtful case for their strategic use. Whether his work proves to be the foundation for long-term U.S. economic dominance remains to be seen. However, after reading his insights, Americans should find renewed confidence that both they — and the dollar — will firmly remain the envy of the world.
