Who is Stephen Miran, Trump’s pick for top economic advisor?

Trump’s pick for top economics advisor is at first glance uncharacteristically conventional. Stephen Miran, the new president’s nominee for the chair of the Council of Economic Advisors, is a Harvard PhD economist and former treasury department official who currently works as a strategist at Connecticut-based hedge fund Hudson Bay Capital. 

But while he may be free of the scandal and inexperience that has weighed on some of Trump’s other cabinet picks, Miran is not a mainstream economic thinker. 

How does Miran see the world? And how will his ideas influence the president? In November 2024, Miran published an essay in which he diagnoses and proposes cures to American economic malaise, focusing on the US trade imbalance and the value of the US Dollar as a reserve currency. The essay points to several key strands in his thinking, some of which are aligned with the Trump administration, and some of which are not. 

An Overvalued Dollar

Miran’s core worldview is unconventional, but different to and significantly more academic than Trump’s. His central argument is that the decline of US manufacturing and export industries is the result of an overvalued dollar, and that this overvaluation is rooted in its status as the global reserve currency. 

Being a reserve currency means that global businesses, investors and central banks use the US dollar to backstop transactions, manage exchange rates. They also hold US dollar assets such as Treasuries as a low-risk and liquid store of value.  

In Miran’s view, the omnipresence of the dollar in global finance props up its value and stops it depreciating to even out trade imbalances by making imports more expensive and exports more competitive. 

Worse still, Miran argues, this overvaluation grows more severe as global GDP grows relative to the US. As global demand for a reserve currency increases the size of the world economy, the US government must issue more treasury bills to support global expansion. These foreign capital inflows are in turn spent on imports, worsening its trade deficit. 

Source: World Bank

This is strikingly different to the Trumpian ‘theory’ of global trade which, to the extent that it has any consistent tenets, seems to argue that the US trade deficit is the result of ‘cheating’ by foreign governments, namely China but also now Mexico and Canada. While Trump has historically claimed that certain currencies, again mostly the Chinese yuan, are undervalued, he has not made the claim that the US Dollar is structurally overvalued. 

Indeed, lessening the reserve role of the dollar - one of Miran’s potential treatments for the US trade deficit - is explicitly at odds with Trump’s mission to preserve the dollar’s influence. In January, Trump threatened 100% tariffs on “seemingly hostile” BRICS countries who threaten to replace the “mighty dollar”. 

But while Trump and Miran may have different theories of the origins of US economic decline, you can see a lot of Miran’s thinking in Trump’s recent policy. 

Tariffs: a free lunch

The first is that tariffs can raise revenue with “little discernible macroeconomic consequence” and “minimal inflationary or otherwise adverse side effects” for American households. This kind of something-for-nothing thinking is clearly appealing to Trump, who recently said that there would “maybe, and maybe not” be some pain from the tariffs. 

Miran argues that the tariffs on Chinese goods implemented in the first Trump presidency caused the dollar to appreciate, meaning that it offset much of the higher price of imports imposed by the tariff. While the effective tariff rate on Chinese goods rose by 17.9%, the Chinese yuan depreciated by 13.7% as a result, meaning that the after-tariff price of goods in USD only rose by 4.2%. 

And because currency adjustment limited the price increase for American consumers, the burden of the tariff falls mostly overseas. Tariffs, according to Miran, are “ultimately financed by the tariffed nation”, and therefore a good source of tax revenue for the Treasury. Again, this is in full alignment with Trump’s “build a wall and make Mexico pay for it” worldview.

The Mar-a-Lago Accords? 

Miran also shares Trump’s explicit politicisation of trade policy: the idea that tariffs, currency and other economic tools can and should be used to achieve non-economic goals in international relations. 

The dollar's role as a reserve currency presents Washington with a trade off between an overvalued currency and the ability to project power through its influence over the global financial system. Reserve currency status is inherently linked to the US’ role as a security guarantor to its allies, and US allies should therefore compensate it for the burden of providing a reserve currency by pulling their weight more on defence. 

This approach is clearly visible in Trump’s most recent threats of tariffs against Mexico, Canada and Colombia. In the first weeks of his administration, he has threatened all three with 25% tariffs, only to back off once their governments acquiesced to his demands to accept military deportation flights or send troops to the US border. This should come as a stark warning to European NATO members, who Trump has long viewed as freeriding on US defence spending. 

But Miran goes even further, arguing that the threat of tariffs or withdrawal of security guarantees could be leveraged to get trade partners to accept a multilateral currency agreement to devalue the dollar, similar to the 1985 Plaza Accords or better known 1944 Bretton Woods Agreement. As these were both known after the resorts in which they were agreed, Miran proposes the ‘Mar-a-Lago Accords’. In it, participant countries would agree to sell dollar bills to increase the value of their own currencies and make US exports more competitive. They would also be made to buy long-dated US government bonds to hold down interest rates on US government debt. Put together, Miran believes that the ‘Mar-a-Lago Accords’ would be a basis for a weaker dollar and a more equitable relationship between Washington and its partners. 

Trump is neither a theorist nor an econometrician. Unlike Miran, he does not try to rationalize his trade policies as part of a consistent worldview. However, in Miran, the president will have someone who can add intellectual credibility to his impulses, and a framework to an otherwise ad-hoc and transactional policy agenda. America’s trade partners - from China to Canada to Europe - should understand that what was once economic heresy is now gospel. 

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