Kuala Lumpur, Malaysia – Donald Trump’s top economic adviser argues that the president is arming tariffs to “persuade” other countries, making sure he pays the US to maintain a global empire that is likely mutually beneficial.
Geopolitical economist Ben Norton was one of the first to highlight the importance of briefings at the Hudson Institute, chairman of Trump’s Economic Advisory Council.
The institute is funded by investors such as Fox News, The Wall Street Journal and Media Czar Rupert Murdoch, who manages other conservative media.
Milan claimed shortly after winning Trump’s election with a user’s guide to rebuilding the global trading system. Milan tries to streamline Trump’s economic policies, which are widely seen as conflicting with traditional wisdom and reason.
Strengthen US domination
Milan defends Trump’s tariffs as part of an ambitious economic strategy to strengthen US interests internationally with “generational change in international trade and the financial system.”
“Our military and financial control is not taken for granted, and the Trump administration is determined to keep them.” Milan claims that the United States offers two major “global public goods.”
First, Milan claims that US military spending provides the world with a “security umbrella” that others should pay. Second, the US issues dollars and Treasury bonds, the main reserve assets for the liquidity of the international financial and financial system.
Milan seems to be unaware of bliss at our long-standing complaints about “exorbitant privilege.” The dollar reserve currency status provides signiorage revenue to the US, but Treasury debt sales have been a long loan to US debt at a very low cost.
Milan’s lawsuit for Trump
The White House threatened others with high tariffs unless they made concessions at their own expense and benefited the United States. As part of an ostensibly grand strategy, Milan’s tariff defense is indirect.
“The president has made clear that the US is committed to maintaining its reserve (currency) provider,” added Milan. He argued that the hegemony of the US dollar is “great” and denied that “dollar control is the problem.”
This “has some side effects, but there may be problems,” but Milan “want to improve the side effects.
For Milan, these side effects are probably at a large disadvantage while ignoring benefits to the US. The chronic US trade deficit was made possible and funded by increasing US debt, allowing the dollar to act as a global reserve currency.
Therefore, the US trade deficit has been maintained since the 1960s, not as he argues, “unsustainable.” US manufacturing is “destroyed” by consumers and cross-border businesses rather than large-scale foreign conspiracies.
Milan’s guide confirmed the “triffin dilemma.” In 1960, Robert Triffin warned that the dollar’s status as a global reserve currency poses problems and risks to US monetary policy.
He invokes Triffin and argues that the US needs dollars for international trade and must import more than exports to provide liquidity to the world in order to retain it as reserves.
Milan adopts a Trump story that simply denounces others. However, the US expected to benefit from the ongoing trade surplus in Breton Woods. In 1944, he opposed an alternative payment arrangement to stop an excessive trade surplus.
The US trade deficit has grown since the 1960s through the reconstruction of “late industrialization” after the World War II in the northern parts of the world.
The empire must pay
The Trump administration wants to eat that cake, but still has it. It intends to strengthen the US empire while minimizing adverse side effects and costs.
Milan hopes foreign countries will “pay” a “fair distribution” in five ways. First, “countries should accept tariffs on exports to the United States without retaliation.” Tariffs provide revenues funding the provisions of public goods around the world. Second, they need to buy “more US-made products”.
Third, they need to “promote defense spending and procurement from the United States.” Fourth, they should “invest and install factories in America.” Fifth, they should “simply… help us to fund the public goods of the world.”
Milan has since emphasized that Trump “no longer supports riding freely on other countries,” and has called for “improvement of shared burdens at a global level.”
“If other countries want to benefit from the US geopolitical and financial umbrellas, they need to pay their fair share,” meaning the world “must bear the cost” of maintaining the US empire.
Trump Dilemma 2.0
Trump wants to use tariffs to force countries with trade surpluses to buy more from the US. Ending these deficits would paradoxically undermine the dollar hegemony that Trump wants to be attached to.
Milan hopes other countries will convert US Treasury bills to 100-year bonds at very low interest rates and effectively subsidize the US over the long term. He also hopes that countries running a trade surplus with the US will purchase longer-term U.S. Treasury securities.
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Trump threatens 100% tariffs on BRICS members and all countries that promote dehydration or damaging dollar hegemony in the international monetary system.
During his first term, Trump wanted to do the near impossible by promoting exports while maintaining a strong dollar!
Milan acknowledges that “the root of the economic imbalance lies in the sustained overvaluation of the dollar that hinders the balance of international trade.” However, he also argues that the dollar “overvaluation is driven by inelastic demand for reserve assets.”
Trump now hopes to kill both US trade and budget deficit birds by increasing revenue by cutting imports and increasing tariffs. He also hopes the world will continue to spend the dollar despite US budget and trade deficits and policy uncertainty.
Meanwhile, official US debt, which funds by selling Treasury bonds, continues to grow. Trump must make the promised tax cuts just before his previous measures go away. Trump may have to go back to his status quo, denying it.
Despite Milan’s best efforts, he cannot provide a consistent rationale for Trump’s rhetoric. However, dismissing Trump as “crazy” or “silly” obscures the dilemma that is impossible by post-war US rule.
IPS UN Bureau
