Trump's Endgame Explained

Advisor: Paper by Stephen Miran Offers Useful Understanding on What's Going On

- Ciaran Ryan

President Donald Trump's fusillade of tariffs against trading partners of the US appears vengeful and self-defeating, but there's more to it than meets the eye.

Last week he introduced 10% tariffs on all goods entering the US, with higher reciprocal tariffs on "the worst offenders" deemed to have imposed punitively high trade barriers on US goods.

South Africa was hit with 31% tariffs, China 34%, Japan 24% and South Korea 25%.

The 31% imposed on SA was supposedly half the average tariff SA levies on US goods, though the actual average is closer to 7.5%.

The impact on global financial markets was painful, with the Nasdaq down 6% and the Dow shedding 4% while import-reliant stocks such as Apple and Nike got hammered.

A useful understanding of what's going on comes from a reading of a paper entitled A User's Guide to Restructuring the Global Trading System written by Trump's new chair of the Council of Economic Advisors, Stephen Miran, previously chief strategist at Hudson Bay Capital.

The 41-page paper, published last November, argues that the US dollar's role as the world's reserve currency has both benefits and disadvantages.

The dollar remains consistently overvalued and that makes US exports less competitive abroad while working to the advantage of countries like China.