Chaotic as it seems, Donald Trump’s tariff war is a deadly serious attempt to address what he and his team perceive as the core issues of the dollar-dominated global monetary system. Look no further than how United States Treasury Secretary Scott Bessent, trade official Peter Navarro and senior economic adviser Stephen Miran share a visceral anger in their public statements.
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The US feels victimised because it runs large current account and trade deficits from the strengthening dollar – due in part to military spending – as trading rivals devalue their currencies, inadvertently or not weakening America’s once mighty manufacturing prowess.
Essentially, the Trump administration wants to reset the dollar-dominated monetary and trading order.
Miran’s November essay, “A User’s Guide to Restructuring the Global Trading System” – dubbed the “Mar-a-Lago accord” – envisions converting Pax Americana into Tax Americana. Users and holders of US dollars, especially allies, would be persuaded to pay user fees essentially, by switching their holdings into long-term securities, if they wish to continue enjoying military protection. Miran’s key weapons for bargaining include tariffs and sanctions.
There is a brutal lesson here from the history of imperial finance. The Roman empire funded itself through military conquests and confiscation of enemy assets, among other ways. The British empire adopted a more civilised model of borrowing funds from colonies and foreign investors, by offering perpetual bonds known as consols. This allowed British capitalists to borrow, reinvest or lend at higher rates. This is exactly the model adopted by Wall Street.
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In 1717, Isaac Newton, as master of the mint, set a mint ratio that reduced the amount of silver in circulation, and it eventually led to the British adoption of the world’s first formal gold specie standard.