White House's Miran outlines five steps countries can take to 'share burden' with the US ...Middle East

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White Houses Miran outlines five steps countries can take to share burden with the US

White House economic advisor Stephen Miran, who is also the Mar-a-Lago Accord proponent, is out with a speech on the role of the US in the world and the dollar. I would suggest reading the whole thing but here are some points.

The US provides two "global public goods": military security and the dollar as reserve currencyBoth services create peace and prosperity globally but at significant cost to AmericansReserve currency status has distorted trade, harming US manufacturing and workersThe Trump administration seeks fairer burden-sharing from nations benefiting from US servicesCurrent trade deficits (ongoing for 50 years) contradict economic models predicting self-correctionTariffs can be effective because other countries need US markets more than US needs their exportsRebuilding US manufacturing is critical for national security and maintaining financial leadership

Here are five solutions he suggests, in his words:

    First, other countries can accept tariffs on their exports to the United States without retaliation, providing revenue to the U.S. Treasury to finance public goods provision. Critically, retaliation will exacerbate rather than improve the distribution of burdens and make it even more difficult for us to finance global public goods.Second, they can stop unfair and harmful trading practices by opening their markets and buying more from America;Third, they can boost defense spending and procurement from the U.S., buying more U.S.-made goods, and taking strain off our servicemembers and creating jobs here;Fourth, they can invest in and install factories in America. They won’t face tariffs if they make their stuff in this country;Fifth, they could simply write checks to Treasury that help us finance global public goods.

    Another critical note is that he says "This time around, tariffs will help pay for both tax cuts and deficit reduction." That goes back to the overall strategy question: Is it to raise funds or to take down foreign barriers?

    He returns to that, and says "revenue is a nice side effect" but claims the main point of them is to lower tariffs, non-tariff barriers and other forms of 'cheating'.

    This article was written by Adam Button at www.forexlive.com.

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