Greg McKenna
Thu, May 1, 2025
Stephen Miran, who heads the president’s Council of Economic Advisers, reportedly failed to reassure bond investors about the president’s tariff plans. In a memo authored shortly after President Donald Trump’s election victory, Miran said a stronger dollar was key to making other nations bear the burden of tax hikes on imports. The greenback, however, is down roughly 8% year to date.
The Trump administration has clear incentive to smooth things over with bond investors, who may have forced the president to back off his sweeping “reciprocal tariffs” earlier this month. But one of Trump’s top economists, who authored a tariff blueprint read widely on Wall Street, reportedly failed to reassure several leading fixed-income traders in a meeting at the White House last week.
Stephen Miran, chair of the Council of Economic Advisers, met with roughly 15 representatives from the likes of Citadel, BlackRock, and PGIM on Friday at an event convened by Citigroup, the Financial Times reported. Apparently, some participants thought it didn’t go well, with sources branding Miran’s comments on tariffs “incoherent” and the Harvard-educated economist “out of his depth” in comments to the FT.
“[Miran] got questions, and that’s when it fell apart,” one person familiar with the meeting told the FT. “When you’re with an audience that knows a lot, the talking points are taken apart pretty quickly.”
Miran is reportedly distancing himself from his 40-page memo, titled “A User’s Guide to Restructuring the Global Trading System,” which he published shortly after Trump’s election victory in November while working at $31 billion hedge fund Hudson Bay Capital. While Miran emphasized the paper was not “policy advocacy,” it offered an argument backing Trump’s claims that other nations, rather than U.S. consumers, would effectively “pay” for tariffs, a theory blasted by most economists.
Now, Miran leads the agency tasked with providing the executive branch with economic research and analysis. The National Economic Council, headed by Kevin Hassett, helps coordinate policy.
“Administration officials maintain regular contact with business leaders and industry groups about our trade and economic policies,” White House spokesman Kush Desai said in a statement. “The only interest guiding the administration and President Trump’s decision-making, however, is the best interest of the American people.”
The Council of Economic Advisers did not immediately respond to Fortune’s request for comment.
Markets currently seem to be experiencing a period of uneasy calm, with the S&P 500 up over 10% from April 8, when the index plunged below the $5,000 mark for the first time in nearly 12 months.
Bond yields, meanwhile, have also steadied after a shocking spike earlier this month sparked fears of a liquidity crisis and raised questions about the safe-haven status of U.S. debt. The 10-year Treasury yield, the benchmark rate for mortgages and other common types of loans, sat at 4.17% early Wednesday afternoon, down from a high of 4.59% on April 11.
Dollar’s decline means Americans will feel tariffs
The selloff in U.S. assets across the board has seemingly poked holes in Miran’s argument that other nations, rather than American consumers, will be hit hardest by a dramatic hike in taxes on imports.
That’s because his vision largely depends on how tariffs theoretically make the dollar stronger relative to foreign currencies. When imports from China become more expensive, for example, less demand for the country’s goods means the value of the yuan compared with the dollar should decline.
In a world where nations like China accept tariffs without retaliating—Beijing, to be sure, has responded with a 125% tax on U.S. imports—higher prices paid by U.S. importers may be offset by a cheaper exchange rate.
“American consumers’ purchasing power isn’t affected, since the tariff and the currency move cancel each other out,” Miran wrote in his memo, “but since the exporters’ citizens became poorer as a result of the currency move, the exporting nation ‘pays for’ or bears the burden of the tax, while the U.S. Treasury collects the revenue.”
Of course, investors have instead piled out of the dollar, which is down 8% year to date.
“If currency offset does not occur,” Miran wrote in November, “American consumers will suffer higher prices, and the tariff will be borne by them.”
Miran also stressed the importance of preventing retaliation and tit-for-tat escalations with trading partners. Trump and Treasury Secretary Scott Bessent claimed this week that negotiations with countries like India, Japan, and South Korea are going well. Meanwhile, Commerce Secretary Howard Lutnick said he already has a trade deal done, but could not yet name the other country.
“Economists are rooting for the penguins of the Heard and [McDonald] Islands,” Paul Donovan, chief economist at UBS Global Wealth Management, wrote in a note Wednesday, referencing the uninhabited Antarctic territory assigned a baseline 10% tariff.
‘Mar-a-Lago Accord’ off the table
Miran had previously suggested tariffs could set up a so-called Mar-a-Lago Accord, or an international agreement to devalue the U.S. dollar like the 1985 Plaza Accord. In the November memo, he also floated instituting a “user fee” for foreign holders of U.S. Treasuries. Critics say the latter would equate to America defaulting on its debt.
Michael Green, portfolio manager and chief strategist of ETF manager Simplify, disputed that characterization, but that doesn’t mean he thinks such proposals make for practical policy.
“They are nice pontifications about what could potentially happen if the U.S. is able to somewhat unilaterally negotiate positions,” he told Fortune.
“What we are seeing in the tariff responses is at least the initial conditions for that are not met,” added Green, who previously founded a hedge fund seeded by George Soros and managed the personal capital of Peter Thiel. “The rest of the world’s like, ‘Why? Why would we do that?’”
The bond market riot earlier this month provides a taste of what a ruinous flight out of U.S. assets could look like. Miran didn’t mention such proposals in a speech to the Hudson Institute, a think tank, earlier this month. As in his memo, however, he insisted the dollar’s status as the world’s reserve currency has hurt American manufacturing and allowed other nations to freeload off Washington’s military might.
“If other nations want to benefit from the U.S. geopolitical and financial umbrella, then they need to pull their weight,” he said, “and pay their fair share.”
Countries could do that, he said, by passively accepting tariffs, committing to buy more U.S. exports, boosting their investment in American infrastructure, and ending “unfair trade practices.”
“Fifth,” Miran said, “they could simply write checks to Treasury that help us finance global public goods.”
If Wall Street bigwigs got a similar spiel last week, some apparently left the White House less than convinced.
This story was originally featured on Fortune.com
Trump’s bubble of economic unreality is coming close to bursting
Analysis by Stephen Collinson, CNN
Wed, April 30, 2025
Secretary of State Marco Rubio, President Donald Trump and Secretary of Defense Pete Hegseth attend a Cabinet meeting at the White House on April 30, 2025, in Washington, DC. - Andrew Harnik/Getty ImagesMore
In the space of a few hours, Donald Trump went from hailing America’s new “golden age” to warning parents their kids would have fewer toys — and they’d cost more.
The president’s dizzying switch this week epitomized the hype surrounding his “Make America wealthy again” promise and the pain it might take to get there.
Trump’s note of pessimism in a Cabinet meeting was a rare admission that his China trade war will mean fewer goods at higher prices and a dose of truth on a day when reality several times threatened to pierce the White House bubble.
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It came as the president on Wednesday fought to dispel bad vibes following official data showing the economy contracted in the first quarter by 0.3% — the first big step-back measure of Trump’s impact on US growth.
The Commerce Department report doesn’t mean the country is tumbling headlong into an immediate crisis. Some of the underlying figures were more encouraging than the GDP dip. Such reports are often amended upward as more data is processed. And although the US economy has been extraordinarily resilient, it’s normal to see cycles of growth and decline in a capitalist nation.
The report is more important for its political and symbolic effect than for its snapshot of a slowing economy. Trump cannot afford for its flashing red lights to become conventional wisdom.
To start with, the data rained on a White House flattery offensive billing Trump’s first 100 days as the greatest-ever burst of presidential action. And it pointed to a growing political vulnerability. While much of Trump’s support derives from his tough border policies, the idea that he’s a master businessman who knows how to steer the economy is key to his mystique. If that is stripped away, his political foundation becomes weaker.
Second, the GDP report played into a growing sense that bleak economic days are ahead and that this is just the start. Trump cannot allow such an impression to take hold. Apart from its impact on his personal standing, panic among GOP lawmakers could rock the fragile unity of the fragile GOP majority in the House — which Trump needs to pass his “big, beautiful” tax and budget plans.
More importantly, amid signs that consumers are already pulling back, evidence that rough times are ahead could become a self-fulfilling prophecy. History shows that a country can talk itself into a recession.
The world is watching, too. If Trump’s sliding approval ratings create any impression of political weakness, it could undermine his negotiating position as he seeks to close trade deals with dozens of countries seeking to avoid his tariffs. If foreign leaders think he’s desperate, why would they put good offers on the table?
President Donald Trump, center left, listens during a Cabinet meeting at the White House, Wednesday, April 30, 2025, in Washington. - Evan Vucci/AP
A familiar excuse: It’s all Biden’s fault
As usual, Trump’s reaction tells the story.
After the release of the GDP report, Trump published a panicky Truth Social post saying, “This is Biden’s Stock Market not Trump’s.” He added, “This will take a while, has NOTHING TO DO WITH TARIFFS.” All day, the president slammed his predecessor to offset blame for the economic numbers. Later, he looked to future data. “This is Biden, and you could even say the next quarter is sort of Biden because it doesn’t just happen on a daily or an hourly basis,” Trump said.
Every administration blames its predecessor for grisly economic news — it’s fair game in politics. And it’s true that it takes time for an administration to establish its own economic policies and see the results. Trump is undoubtably responding to a real economic problem — the gutting of many communities in industrialized parts of America as the result of globalization.
But his claim that disappointing economic indicators are the fault of his predecessor would have more credibility had he not initiated the most disruptive assault on the global economic and trading system since World War II with little planning, questionable metrics and trademark chaos.
The day that Trump stood up in the White House Rose Garden with his scoreboard showing each nation’s tariff rate, he took ownership of the economy. Many of the shocks and uncertainties that are weighing on investors and consumers can be traced directly back to “Liberation Day.”
Millions of Americans, meanwhile, have seen the impact on their 401 (k) pension plans. These have been especially scary months for those who have just retired or plan to do so soon.
And one important reason why Trump won the 2024 election is that voters judged him to have more credible answers on reducing the costs of living, such as groceries. Despite the president’s attempts to obscure the truth, he’s done little to mitigate those prices, which have a huge impact on the lives of those who — unlike most of his Cabinet members — are not millionaires or billionaires.
Public perceptions have also been shaped by an avalanche of evidence that the economy is headed south.
“This has probably been the least successful first 100 days of a presidency on the economy in history, in the last century,” former Treasury Secretary Larry Summers told CNN’s Kate Bolduan. “We’ve seen the stock market go down by as much as ever. We’ve seen the dollar go down more than ever. We’ve seen forecasts of unemployment go up. Forecasts of inflation go up. Forecasts of the odds of recession go up. We’ve seen consumer confidence collapse. We’ve seen businesses take back all their previous earnings projection.”
Top administration figures dismissed such a downbeat prognosis.
“This was the best negative print, as they say in the trade, for GDP I have ever seen in my life. It really should be very positive news for America,” Trump’s trade adviser Peter Navarro told reporters. Trump, meanwhile, claimed credit for a spike in investment in the report — raising the question of why that indicator was down to him while more negative figures were attributable to Biden.
Other officials argued the Commerce Department numbers were influenced by a sudden tsunami of imports that suppressed the growth calculation. This, they said, gave a false reading of the economy’s health. But the import surge came as companies stockpiled products in the expectation that Trump’s tariffs would shut down trade. It is therefore more an indicator of coming economic problems than a marker of current strength.
President Donald Trump delivers remarks at an "Investing in America" event in Washington, DC, on April 30, 2025. - Leah Millis/Reuters
The gap between reality and Trump’s promises
The dueling mix of rhetoric and data coming out of the administration on Wednesday suggests the White House has a growing problem that will go a long way to dictating the shape of Trump’s second term.
Having launched the US and the world into the economic unknown — on his own gut calls — Trump’s path to a successful outcome is looking opaque.
That’s why his comment on the cost of toys was so revealing.
The president was referring to the potential impact of his showdown with China — the most important front in the trade war. With Chinese President Xi Jinping still refusing to bend to the president’s 145% tariff, the president has been insisting for days that he and his administration have been involved in intense talks with Beijing, despite no public evidence this is the case. US-based observers don’t usually believe China’s communist government over statements from Washington. But this administration’s record of propaganda and falsehoods means that it’s not getting much benefit of the doubt these days.
The president, describing China as the “chief ripper-offer” of US factories and workers, boasted that his action had caused cargo ships laden with goods for the US market to turn around and head back to port. He curiously painted all this as a good thing.
“You know, somebody said, ‘Oh, the shelves are going to be open,’” Trump said. “Well, maybe the children will have two dolls instead of 30 dolls, you know? And maybe the two dolls will cost a couple of bucks more than they would normally.”
The remark may have been flippant, but it was revealing nonetheless, and pointed to a looming trap for the president.
There is a solid argument that the United States has let itself become too reliant on cheap consumer goods from China and that, for the overall health of the nation, it would be better to have a more balanced economy.
But it’s a discordant political argument for a billionaire president who moves in an orbit of wealthy CEOs and members of his Mar-a-Lago club to tell working parents that they will be able to afford fewer toys for their children.
And this goes far beyond dolls.
While the trans-Pacific pipeline of goods from China has hurt US domestic manufacturing, it has raised living standards for millions of Americans. Almost everyone has benefited from cheaper school supplies, clothes and consumer electronics like flat-screen TVs. Every parent knows how quickly kids grow out of their shoes. Most of that footwear comes from China.
If that suddenly goes away, there’s going to be real pain.
This was one of the only times he’s leveled with the Americans about the probable cost of his trade clash with Beijing.
White House Press Secretary Karoline Leavitt joined by Secretary of Treasury Scott Bessent, holds a news article on Amazon founder Jeff Bezos during the daily briefing in the Brady Briefing Room of the White House in Washington, DC, on April 29. - Mandel Ngan/AFP/Getty ImagesMore
But the White House is still trying to keep reality at bay. On Tuesday, Press Secretary Karoline Leavitt accused Amazon of a “hostile and political” act following a since-denied report it planned to itemize the true cost of tariffs to shoppers on its websites.
And much of Trump’s day Wednesday was taken up by events featuring Cabinet members and friendly business figures lavishing him with praise.
“President, your first 100 days has far exceeded that of any other presidency in this country ever, ever. Never seen anything like it. Thank you,” said Attorney General Pam Bondi during the pageant of sycophancy at the Cabinet meeting. It was not the first time recently that the White House communications effort has seemed more geared to boosting the president’s morale than that of the country.
Some of this is comical. But it suggests that a president who has set the economy and the world on a perilous course is not getting genuine advice about the consequences.
So the gap between reality and Trump’s world will only grow, and will undermine statements like the one he made in Michigan on Tuesday night.
“Our Golden Age has only just begun.”
CNN.com
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