A New Era for the U.S.-Led Global Order
White House Council of Economic Advisers Chairman Stephen Miran delivered a landmark address at the Hudson Institute this week that helpfully explains the economic doctrine of President Trump’s second term. In it, Miran unveiled a sweeping critique of the global order America has underwritten for decades and laid out the rationale behind the administration’s bold effort to rebalance the burden of global peace and prosperity.
Miran opened with a striking premise: that the United States provides what economists call “global public goods”—most notably military security and financial stability through the dollar’s reserve currency status. These, he said, have enabled the greatest era of peace and prosperity in human history. But they are not free. American soldiers and taxpayers foot the bill, while foreign nations, including rivals like China, benefit disproportionately.
“Americans have been paying for peace and prosperity not just for themselves, but for non-Americans too,” Miran said.
He warned that this arrangement is no longer sustainable and that President Trump is determined to end the era of foreign free-riding. In both national defense and international trade, the Trump administration is demanding what Miran called “burden sharing”—a restructuring of global economic relationships to reflect the true costs and responsibilities of maintaining the international system.
The Cost of Dollar as the Global Reserve Currency
Miran turned specifically to the U.S. dollar’s role as the global reserve currency, which he argued has had harmful side effects for the American economy. The dollar’s reserve status creates intense demand for U.S. financial assets, such as Treasury bonds, which in turn keeps the dollar strong and American exports expensive. The result, Miran said, has been the hollowing out of U.S. manufacturing. Since the peak of American industrial employment, the workforce has declined by over a third, and the U.S. share of global manufacturing has dropped by 40 percent.
While economists have long claimed that trade deficits self-correct over time—predicting a weaker dollar and a rebalancing of trade flows—Miran flatly rejected this view. “The long run is here, and the models are wrong,” he said.
The United States has run persistent current account deficits for five decades, and the dollar has remained strong throughout. Under Biden, the deficit ballooned to nearly four percent of GDP, up from around two percent during Trump’s first term. This is not a temporary imbalance, Miran argued, but a structural flaw in the global system rooted in America’s unique financial role.
He called for a new strategy that would compel other nations to contribute more to the costs of the system they rely upon. Nations that benefit from U.S. security and financial stability should begin contributing through trade concessions, increased purchases of American goods, and direct investment in U.S. industries. Foreign companies, Miran argued, can avoid tariffs entirely by relocating their factories to America. He even floated the idea that allies could send direct payments to the U.S. Treasury to help offset the costs of maintaining global order.
Tariffs as the Tool for a Global Trading Reset
A centerpiece of the Trump administration’s approach, Miran said, is the use of tariffs—not as blunt instruments of protectionism, but as tools of economic realism.
He dismissed the economic consensus on tariffs as misguided, rooted in outdated theories that don’t account for persistent trade imbalances and the structural effects of reserve currency status. Most economic models, Miran said, assume that trade deficits are fleeting and that tariffs inevitably do more harm than good. But new research, he argued, shows that tariffs can generate revenue, impose significant costs on surplus-running nations, and even boost growth at home—especially when the proceeds are used to finance tax cuts and reduce deficits.
“Countries that run large trade surpluses are pretty inflexible,” he explained. “They can’t find other sources of demand to substitute for America’s. Instead, they have no choice but to export, and America is the largest consumer market in the world.”
Forklifts move shipping containers at Port Miami on April 7, 2025 in Miami, Florida. (Joe Raedle/Getty Images)
He pointed to the Trump administration’s earlier tariffs on China as proof of concept. The Chinese government, unable to stem the loss of export access, allowed its currency to depreciate. That meant Chinese citizens saw their global purchasing power decline—a cost paid by China, not American consumers. The revenue, Miran noted, helped finance President Trump’s tax cuts in his first term. Now, similar tariffs will help pay for new tax cuts and deficit reduction in the second.
“Lower taxes on Americans, financed in part by revenue provided from foreigners, will create economic growth, dynamism, and opportunity the likes of which our country has never seen, ushering in President Trump’s new Golden Age,” he said.
Miran was careful to note that tariffs are not being used solely to raise revenue. They are also aimed at punishing and deterring cheating by foreign governments—whether through currency manipulation, illegal subsidies, or non-tariff barriers that shut out U.S. goods. But the revenue is a powerful bonus, especially when it can be recycled into policies that enhance U.S. competitiveness.
The stakes, Miran argued, are existential. Hostile powers are attempting to erode America’s industrial base, destabilize its financial system, and undermine its ability to defend itself and the free world. Without a revival of U.S. manufacturing strength and a rebalancing of the global economic burden, America may no longer be able to sustain the very systems it created.
“The world can still have the American defense umbrella and trading system,” Miran said, “but it’s got to start paying its fair share for them.”
That, in a sentence, is the Trump economic strategy—and it is not just a campaign slogan or a governing instinct. It is now a political and economic doctrine with intellectual firepower and moral clarity.
