Although all looks are put in the tariffs that Donald Trump wants to impose on international trade, which threaten to shake the economy of the middle planet, there is a tariff that can be even more important than all of them. One of the main advisors of the US president has designed a plan to weaken the dollar that goes through imposing a tariff on the purchase of US Treasury Bonds. A ‘money tariff’ that would put the international financial system up.
The key is Stephen Miran, president of the White House Economic Advisors Council. One of its obsessions is to weaken the dollar to ensure that the US industry is more competitive. And he believes that the supremacy of the dollar in the financial system is the great enemy of this objective. After rumors have appeared that point to an attempt to agree on a devaluation of the dollar with commercial partners, similar to the 1985 Plaza Agreement, they now propose a very unorthodox movement, and with many detractors, which fits with the tariff policy that the new president is defending. Just as the United States baptized its greatest non -nuclear weapon as “the mother of all bombs”, Miran’s idea is to create “The mother of all tariffs”, which can return to the world financial system: put taxes to the purchase of dollars by foreign countries.
The theory on which they are based is that foreign countries buy and accumulate dollars on purpose to weaken their coins, so that the exchange rate with the dollar is more favorable and thus favor their export industry. The US, with a expensive exchange rate, cannot compete, and its industry withers, leaving without manufacturing jobs a percentage of the population.
Miran’s proposal aims to defend the interests of US citizens who have seen how US production leaves other countries, while those who benefited from it were the richest citizens, with the ability to take advantage of the entry of Chinese money into the most financial American economy. “The overvaluation of the dollar has weighed a lot in the manufacturing sector, while it has benefited the most financial sectors of the economy, benefiting wealthy Americans,” they explain in A document published in November 2024in which he explains his project to restructure the global trade system.
A plan to try to reduce the fiscal deficit
The new US administration seems to be valuing the idea of breaking with economic orthodoxy on this front, in order to try to solve the problem of the country’s fiscal deficit. In his opinion, the fiscal deficit occurs in large part as a result of a negative commercial balance with most countries, and that, if all US dollars who end up in foreign hands stay in the US and contribute to the country’s growth, instead of staying in the coffers of any investor in China, the American government would not have to incur such high fiscal deficits to stimulate the economy. It would be these own dollars and also the foreign investment in productive capacities of the country, which would cover that hole.
“When our factories disappear and the jobs that are created go abroad, US workers face not only financial insecurity, but also a deep loss of personal and collective identity,” said JD Vance, vice president of the United States, at the last American Dynamism conference, on March 21. While Vance does not come to assess the question of the tariff, All your speech He revolved around an idea: the process of deindustrialization in the United States, where, in his opinion, it has preferred to seek cheap labor instead of manufacturing in the country, and innovating how it was done with the revolution of the assembly chain.
To solve this situation, a political response that is being raised would be to put a ‘money tariff’: The Government would charge a commission for treasure bonds in the hands of foreign central banks, discouraging that accumulation.
For JD Vance, Miran’s theory that seeks to discourage the purchase of dollars to weaken the American currency is not only economic, since, in his opinion, he is intrinsically related to an increase in the industrial capacity of the United States, and intends to try to reverse the loss of “a purpose”, the “feeling of utility” that citizens can find in their employment, and that, in their opinion, has deteriorated during the last 40 years.
Miran’s theory, and the approach that the Trump administration is adopting, according to Vance’s statements, is based on the idea that globalization has failed, at least for the US, both in the economic front, by the increase in the country’s deficit derived from the exit of money to foreign countries and a deterioration of innovation, as in social, to keep the country as “a nation of builders”, as Vance said in its discourse. “We manufacture things. We create things,” insists the vice president.
Vance’s speech is supported by the Vice President’s Think Tank, American Compass, who has defended the application of global tariffs at the entrance of capital in the United States to end the problem of commercial deficit and boost the industrial growth of the United States.
The project to create a money tariff has a clear objective: China. On February 21, the White House published an executive order called “Investment Policy America First” that raises a review to suspend, or end, an agreement that was approved in 1984 that eliminated a 30% tariff to the Chinese money that entered the US. If confirmed, it would be Reactivate this Chinese capital tax, but the implementation of a tariff to purchases of dollars by other countries would be in the air.
Rupture with economic orthodoxy
The rupture with the economic orthodoxy posed by Miran’s theory is not exempt from criticism. The idea that a weak dollar will be The Balm of Fierabrás Against all the US deficit problems, both the commercial and the prosecutor, is very discussed by academics. In fact, for many, the dominant position that the richest country in the world has had in recent years is based otherwise: a strong dollar, as a world reserve currency, which has allowed the country to maintain a high fiscal deficit position, without generating inflationary pressures.
A tariff, in itself, is a tool that can generate inflation, and many analysts have notified it in recent months after confirming the US administration that would apply new rates to different countries of the world. Miran is aware: “Many argue that tariffs are highly inflationary and that they can generate economic and market volatility,” he acknowledges, but defends that “that does not have to be the case”, and puts an example “the tariffs of 2018-2019 Macroeconomic, “he says.
In general, it is assumed that a policy to maintain the strong dollar is the most appropriate strategy for the country’s economy in the long termalthough there are some US experts and responsible people who have highlighted the positive impact that a weak dollar can have at specific times, facing the short term. Janet Yellen, former president of the Federal Reserve and former secretary of the US Treasury, is one of the examples of the defense of a strong currency: “The United States does not seek a weak currency to gain competitive advantage, and we must oppose attempts to do this by other countries,” explained the Secretary of the Treasury in 2021.
This type of statements has been a mantra repeated by the different secretaries of the American treasure in recent decades. Robert Rubin said in 1995 that maintaining a strong dollar was among the interests of the United States, a position that his successors maintained, until Steven Mnuchin nuanced him, highlighting that it was not something that was necessarily positive “in the short term”, although he did recognize that it was in the long term. In the long term, consensus is clear: the strong dollar is very positive for the United States, and the intention of the different administrations in recent years has been to keep the dollar as the main world reserve currency on the planet, a status that still maintains, but which, over the years, is deteriorating. If at the beginning of the year 2000 the dollar was more than 70% of foreign currency reserves that accumulated worldwide, their peso has fallen to 57% at the end of last year.
Daniel Lacalle, a Tressis chief economist, defends the policy of a strong dollar, and ensures that a plan to weaken the dollar, such as the one that is being considered in recent days, is not in the plans of the new administration. “The objective of the administration is the opposite: strengthening the position of the dollar as the reserve currency of the world. In the US they have earned inflation elections and, will they even create the Americans even more inflation devaluing the dollar? It is demonstrated that devaluing the dollar does not reduce the deficit, because the expenses rise in nominal terms,” explains the expert in his last interview in electionomista.es.
Scott Besent himself, secretary of the US Treasury, He has denied the greatest this year when the possibility of changing the strategy on the dollar has been raised and seeking a weakening of the currency. “The policy of a strong dollar remains totally intact with President Trump. We want the dollar to be strong; what we do not want is that other countries weaken their currencies to manipulate their trade,” Besent said.
After all, what they look proposes with their plan is a breakdown of economic orthodoxy that have followed the highest responsible for the US treasure in recent decades, and there are examples that, getting out of the way outlined usually involves great risks. The last one is the one that has occurred in Türkiye in the last decade.
The insistence of President Recep Tayyip Erdogan to maintain the cheap lyre, lowering interest rates despite the increased increase in inflation, worsened an economic crisis that the country has not yet come out. Weakening the currency had the secondary effect scare away investors, causing a sinking of foreign investments in Türkiye. The insistence on maintaining the cheap currency caused a shortage of dollars and an historical inflationary crisis that have destabilized their economy, braking growth and increased public debt.
It is true that the US is not Türkiye, and that the international demand of the dollar remains very strong. But with a public debt that exceeds 120% of GDP, a deficit that is around 6% per year and fiscal plans of the new government that imply further lower taxes and pay the difference with even more public debt, the risk that the US would run by launching a weak dollar policy is very high.
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