MNI INTERVIEW: Miran Sees US Trade Deal 'Flurry,' 3% H2 GDP

The U.S. economy could expand at around 3% in the second half of this year, powered by a looming string of deals with key trading partners and the passage of a tax bill that will unlock fresh business investment and hiring, Stephen Miran, chair of the White House Council of Economic Advisers, told MNI on Tuesday. 

Miran said economic data so far indicate growth has remained resilient despite worries that rapid shifts to trade policy and the associated uncertainty would undermine economic activity.

“I do expect a lot of the uncertainty to start resolving in the near term,” he said in an interview from his office at the White House, citing an “ambitious” deadline to get President Donald Trump’s signature tax bill passed by July 4 and coming trade agreements. “I also expect a flurry of trade deals in the period leading up to July 9. That’s because the way these negotiations are structured is, there’s a series of stages that each country is passing through in the negotiations.”

Against that backdrop, U.S. GDP could expand 3% in the second half of the year as firms and consumers operate in what Miran described as a more business-friendly, less regulation-heavy backdrop. 

Growth at 3% for the year will be "difficult, given Q1," he said. "But could we be running at a 3% annualized rate for the second half or for the last three quarters of the year? It's possible. If we get the tax bill done on time, and we start making trade deals on schedule, it’s very possible that we hit that rate for the last three quarters of the year annualized,” he said. 

A “sustained and material” rise in energy prices due to worsening conflict in the Middle East could alter this outlook, but thus far there is no evidence of any such effects, he said. 

Miran described the job market as healthy, adding that the president’s immigration restrictions are unlikely to have a major effect on the data because the areas of the labor market showing the most slack – younger workers – are those most likely to be in competition with the undocumented immigrants the administration is trying to deport. 

He also said the May CPI report helps counter critics’ suggestion that tariffs would be sharply inflationary. Core CPI posted a fourth month of lower-than-expected readings in May, rising 2.8% on an annual basis.  

“Thus far, all of the evidence that we received indicates the economy continues to grow at a healthy pace. Consumer inflation is not only contained, it’s at the lowest annual rate since March of 2021. CPI is running at 1.5% annualized rate since the president took office. Things look pretty decent in terms of non-inflationary strong growth.” (See MNI INTERVIEW: Tariff Uncertainty To Drive Factory Outlook-ISM)

TRADE DEALS

Miran said uncertainty about trade policy might have delayed or altered spending plans for some businesses, but not permanently so, or in a way that will significantly dampen growth. “It’s not going to change the underlying story." 

His optimism on the trade front was underpinned by the view that the United States only needs to make deals with a fraction of major trading partners in order to settle most of the uncertainty that has plagued financial markets since tariffs were first introduced April 2. 

“You don’t have to reach 200 trading deals, you have to reach about 20. Even if you reach only five or 10 of the important ones, you’ve made a really big dent in covering most of the trade that we do,” he said. 

“I understand that uncertainty is a real thing, I understand that it’s made things difficult for firms to plan – I expect a lot of the uncertainty to begin resolving in coming weeks and to continue resolving over time.”

CHINA FRAMEWORK

Of course, the biggest deal of all is the one tentatively struck with China, and Miran is hopeful the existing framework will lay the foundation for a constructive relationship.  

“The U.S. and China have agreed to a framework for implementing the Geneva deal. So far, things are on track, and we expect China to live up to the commitments that it made in Geneva,” he said. 

“If they do that, then I have no doubt that we’ll continue negotiating with China to see if we can make even more improvements in the trading relationship.”

Asked if purchases of U.S. Treasuries could play a role as a bargaining chip, which Chinese advisers have told MNI is something that could be on the table, Miran said this is not currently under consideration. (See MNI: China Advisers Hopeful Of U.S. Trade Deal By Mid-August)

“We’re focused right now on implementing the Geneva deal, and then I think once we’re satisfied that this has been implemented, maybe there will be scope for further talks. But right now we’re focused on what’s immediately in front of us.”