The theory of Trump's economic advisor: 20% tariff + "Mar-a-Lago Agreement" to suppress the dollar + Federal Reserve QE

Trump's economic advisor advocates for high tariffs and a weak dollar policy.

According to media reports, Stephen Miran, the economic advisor to President-elect Trump, recently proposed a controversial economic theory, advocating for raising the average tariff rate in the United States from the current 2% to around 20%, and possibly even as high as 50%.

As a senior strategist at the asset management company Hudson Bay, Miran stated in a report last November:

"Implementing comprehensive tariffs and changing the strong dollar policy could have the broadest impact in decades, fundamentally reshaping the global trade and financial system."

Miran believes that this high tariff policy could address long-standing global economic contradictions: U.S. economic and military support for other countries has led to an overvalued dollar, an expanding trade deficit, and the hollowing out of the industrial base.

In addition to high tariffs, Miran also proposed a weak dollar policy, suggesting that the "Mar-a-Lago Agreement" could be used to weaken the dollar to enhance trade competitiveness. Miran believes that after implementing a series of punitive tariffs, trade partners in other countries may be more willing to accept some form of currency agreement in exchange for lower tariffs.

Analysts have previously stated that the new "Mar-a-Lago Agreement" is similar to the "Plaza Accord" of 1985, aiming to divide the global economy into three groups based on how willing countries are to cooperate with U.S. objectives. The U.S. Treasury Secretary previously nominated by Trump stated that the "Mar-a-Lago Agreement" is more complex and has a broader impact than the "Plaza Accord."

Miran expects that if the weak dollar policy triggers a sell-off of long-term U.S. Treasury bonds, the Federal Reserve may need to purchase these bonds to limit the rise in long-term interest rates, essentially implementing quantitative easing (QE) measures. He believes that the Federal Reserve is more likely to cooperate with the Treasury in currency and bond interventions in exchange for monetary policy independence.

At the same time, Miran also acknowledged in the report that the proposed economic policies carry high risks and may face numerous challenges during implementation:

"These policies can be implemented without significant adverse consequences, but the path is very narrow."

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