MNI INTERVIEW: Tariff Benefits Loom Despite Some Fallout-Miran

U.S. President Donald Trump's new tariff regime is aimed at addressing long-standing trade imbalances that have hollowed out American manufacturing, and the economy stands to benefit broadly despite a negative market reaction, White House Council of Economic Advisers Chair Stephen Miran told MNI Thursday. 

“In the short term there’s obviously a lot of market volatility and given the scope and speed of the president’s historic action, there will be some fallout from that,” Miran said in an email exchange the day after the administration major announcement. 

“However, in the longer term these tariffs provide a powerful incentive for firms to invest in America and make stuff here, and the revenue is a nice side effect that will help us not only preserve the president’s historic tax cuts from his first term, but provide further tax relief to American families.”

Asked about his growth forecast for this year and whether the tax cuts would come in time to help redress the recent retrenchment in consumer and business sentiment, Miran did not give a specific GDP estimate but sounded an optimistic note. 

“Don’t forget that imports are only about 14% of the economy, while the taxes and deregulation affect the other 86%. So there’s a lot of juice left in terms of unleashing economic growth, and President Trump has repeatedly said that he wants to provide further tax relief for American families,” he said. Miran urged Congress to “preserve low tax rates on American workers and firms and provide even more tax relief.”

Trump used a Rose Garden ceremony Wednesday to unveiled new 10% baseline tariff on all imported goods, in addition to reciprocal tariffs on around 60 countries, and other sectoral tariffs from autos to semiconductors. Stock markets have fallen sharply around the world in reaction and the dollar has retreated.  

DO NOT RETALIATE

Miran urged American trading partners not to retaliate against the new tariffs or risk a new round of punitive measures. 

“My advice to foreign leaders would be not to retaliate, since the president reserved the right to increase tariffs even further if they do so. Instead, I’d point out that the president is famous for his ability to create deals where nobody thought it was even possible. So they should convince him what they can do for America,” he said.

MAR-A-LAGO

Miran indicated a possible Mar-a-Lago currency accord that seeks to further address trade imbalances, an idea he explored in detail in a now famous-paper written before he joined the administration, is not currently in the works. But he left the door open for future such negotiations.

“The president can’t have been clearer that he’s focused on redressing the unfair way our trading partners have treated us for decades.  He’s also famous for his ability to negotiate and close deals.  So if anyone can, in the future, negotiate a multilateral accord like that, it’s him, but he’s been very clear he’s focused on fair and reciprocal tariffs right now,” Miran said.