Stephen Miran: Trump tariff architect, now in US Fed

Advocate for imposing tariffs

It is a 41-page ‘User’s Guide to Restructuring the Global Trading System’ — which he wrote in November 2024, while working as a senior strategist at the global investment management firm, Hudson Bay Capital — that made the world really take notice of Miran.

The essay forcefully argued in favour of the US imposing sweeping tariffs not only to help preserve its edge in high-value-added manufacturing and prevent further off-shoring of such industries, but also to “increase negotiating leverage” for securing trade concessions. This was premised on the notion that access to the US market “is a privilege that must be earned, not a right”.

The extension of such “privilege” was, in turn, conditional upon countries satisfying certain criteria that were both trade and national security-related. Among the ones that Miran identified  were:

• Did the country in question apply similar tariff rates to its imports from the US as the latter did to its imports from the former?
• Did it have a history of artificially weakening its currency through the accumulation of excessive foreign exchange reserves?
• Did it respect the intellectual property rights of US firms?
• Did it side with China, Russia and Iran in key international disputes, including at the United Nations?
• Did it trade with sanctioned entities or help such entities evade sanctions?
• Did it help China evade tariffs via re-exports?
• Did it support or oppose US security efforts in various theatres?
• Did it harbour the enemies of the US, including terrorists and cybercriminals?

India is currently bearing the brunt of the selective use of such criteria by the Trump administration. Most notable of these is the 50% general duty on its goods exports to the US. That includes a 25% so-called reciprocal tariff and a 25% “penalty” for its import of Russian oil and defence equipment.

The 50% tariff, when applied for an extended period, will certainly hurt India’s merchandise exports to the US, which were valued at $86.5 billion in 2024-25. A significant chunk of it comprised products in employment-intensive sectors from readymade garments, textiles, handicrafts and leather products to shrimps and gems & jewellery.

By weaponising tariffs, the Trump administration is simultaneously putting pressure on the Narendra Modi-led government to remove barriers to the import of American goods to India. That includes genetically modified maize and soyabean, ethanol, dairy products and other farm produce, which India has hitherto considered to be “red lines” in trade negotiations with other countries as well.

Push for a weaker dollar

Apart from advocating the use of trade and tariff policies as instruments for “negotiating leverage” to further America’s economic as well as strategic interests, Miran has been a backer of a weaker dollar. His November 2024 paper blamed the United States’ large and widening external current account and merchandise trade deficits on the “persistent overvaluation” of the dollar.

The overvaluation has “weighed heavily on the American manufacturing sector” by making US exports less competitive, imports cheaper and leading to the closure of factories.

Miran has called for a controlled depreciation of the dollar that will help retain its advantages from being the world’s reserve currency. Trump has, in fact, warned BRICS member-countries (China, India, Brazil and Russia) against replacing the dollar with any other alternative currency for settlement of  international transactions or holding of reserves.

A “managed decline” in the value of the dollar, which will enable the re-industrialisation of the US economy and restore balance to the global trading system, would require an international coordination effort similar to the Plaza Accord of September 1985. That accord involved France, West Germany, Japan, and the United Kingdom together agreeing on a depreciation of the dollar relative to their currencies.

Miran has floated the idea of a new ‘Mar-a-Lago Accord’ — the reference here is to a resort in Palm Beach, Florida, owned by Trump — on the lines of the 1985 deal reached in New York’s Plaza Hotel.

The idea of forcing countries, especially China and the European Union, to accept a weaker dollar and lower interest rates on their US bond investments is likely to gain momentum with Miran becoming a US Federal Reserve governor.

The pressure on Powell to cut interest rates more aggressively will probably intensify now. Miran, on his part, has viewed an overvalued dollar and high interest rates to have largely benefited the “financialised sectors” of the US economy at the expense of hollowing out its manufacturing industries.