Trump Wants World to Subsidise US Empire

By Jomo Kwame Sundaram

KUALA LUMPUR, Malaysia, Apr 22 2025 (IPS) - Donald Trump’s top economic advisor claims the President has weaponised tariffs to ‘persuade’ other nations to pay the US to maintain its supposedly mutually beneficial global empire.

Geopolitical economist Ben Norton was among the first to highlight the significance of Trump’s Council of Economic Advisers chairman Stephen Miran’s briefing at the Hudson Institute.

The Institute is funded by financiers such as media czar Rupert Murdoch, who controls Fox News, The Wall Street Journal, and other conservative media.

Miran made his case just after Trump’s electoral victory in A User’s Guide to Restructuring the Global Trading System. Miran attempts to rationalise Trump’s economic policies, which are widely seen as at odds with conventional wisdom and reason.

Enhancing US dominance

Miran defends Trump’s tariffs as part of an ambitious economic strategy to strengthen US interests internationally with a “generational change in the international trade and financial systems”.

“Our military and financial dominance cannot be taken for granted, and the Trump administration is determined to preserve them”. Miran claims the US provides two major ‘global public goods’, both “costly to us to provide”.

First, Miran claims US military spending provides the world a ‘security umbrella’ that others should also pay for. Second, the US issues the dollar and Treasury bonds, the main reserve assets for the liquidity of the international monetary and financial system.

Miran seems blissfully unaware of longstanding complaints of US ‘exorbitant privilege’. The dollar’s reserve currency status has provided seigniorage income to the US while Treasury bond sales have long financed US debt at very low cost.

Miran’s case for Trump

The White House has threatened others with high tariffs unless they make concessions, at their own expense, benefiting the US. Miran’s defence of tariffs is indirect, as part of an ostensible grand strategy.

“The President has been clear that the United States is committed to remaining the reserve [currency] provider”, Miran added. He claims US dollar hegemony is “great” and denies “dollar dominance is a problem”.

While this “has some side effects, which can be problematic”, Miran “would like to … ameliorate the side effects, so that dollar dominance can continue for decades, in perpetuity”.

For Miran, these side effects are supposedly largely adverse while ignoring the benefits to the US. Chronic US trade deficits have been possible and financed by mounting US debt, enabling the dollar to serve as a global reserve currency.

Hence, US trade deficits have been sustained since the 1960s, rather than “unsustainable”, as he alleges. US manufacturing has been “decimated” by its consumers and transnational corporations, not by an extensive foreign conspiracy.

Miran’s Guide acknowledged the ‘Triffin dilemma’. In 1960, Robert Triffin warned that the dollar’s status as global reserve currency posed problems and risks for US monetary policy.

He invokes Triffin to argue that the US must import more than it exports to provide liquidity to the world, which needs dollars for international trade and to hold as reserves.

Miran adopts the Trumpian narrative of only blaming others. However, the US expected to benefit from continuing trade surpluses at Bretton Woods. In 1944, it opposed alternative payments arrangements to deter excessive trade surpluses.

US trade deficits have grown since the 1960s with post-World War II reconstruction of the Global North and uneven ‘late industrialisation’ in the Global South.

The empire must pay

The Trump administration wants to eat its cake and still have it. It intends to strengthen US empire while minimising adverse side effects and costs.

Miran wants foreign nations to “pay their fair share” in five ways. First, “countries should accept tariffs on their exports to the US without retaliation”. Tariffs provide revenue, which has financed its global public goods provision. Second, they should buy “more US-made goods”.

Third, they should “boost defense spending and procurement from the US”. Fourth, they should “invest in and install factories in America”. Fifth, they should “simply … help us finance global public goods”, i.e., foreign aid should go to or via the US.

Miran then emphasises that Trump “will no longer stand for other nations free-riding”, and calls for “improved burden-sharing at the global level”.

“If other nations want to benefit from the US geopolitical and financial umbrella, then they need to … pay their fair share”, i.e., the world must “bear the costs” of maintaining US empire.

Trump dilemmas 2.0

Trump wants to use tariffs to force countries with trade surpluses with the US to buy more from the US. Ending these deficits would undermine dollar hegemony, which, paradoxically, Trump obsessively wants to preserve.

Miran wants other countries to convert their US Treasury bills into 100-year bonds at very low interest rates, effectively subsidising the US over the long term. He also wants nations running trade surpluses with the US to buy more long-term US Treasury securities.

Trump has threatened 100% tariffs on BRICS members and all countries promoting de-dollarisation or undermining dollar hegemony in the international monetary system.

During his first term, Trump wanted to do the near-impossible by boosting exports while preserving a strong dollar!

Miran acknowledges that the “root of the economic imbalances lies in persistent dollar overvaluation that prevents international trade balancing”. But he also insists that dollar “overvaluation is driven by inelastic demand for reserve assets”.

Trump now hopes to kill both US trade and fiscal deficit birds by cutting imports and raising revenue with higher tariffs. He also wants the world to continue using dollars despite the US budget and trade deficits and policy uncertainties.

Meanwhile, official US debt, financed by selling Treasury bonds, continues to grow. Trump has to deliver his promised tax cuts soon before his earlier measures run out. Trump is falling foul of his bluster and may have to revert to the status quo ante while denying it.

Despite Miran’s best efforts, he cannot provide a coherent rationale for Trump’s rhetoric. But dismissing Trump as ‘mad’ or ‘stupid’ obscures the impossible dilemma due to and obscured by post-war US dominance.

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• America First Deepens World Stagnation

• Imperialism (Still) Rules

• An ‘Exorbitant Privilege’ for All?

• US Fed- Induced World Stagnation Deepens Debt Distress

• Trade, Currency War Weapons Double-Edged

• What’s different about Trump’s tariffs?

• Trump’s Trade War in Perspective

Available online here: Trump Wants World to Subsidise US Empire

Trump’s ‘Shock and Awe’ Tariffs

By Jomo Kwame Sundaram

KUALA LUMPUR, Malaysia, Apr 15 2025 (IPS) - US President Donald Trump has again seized global attention by arbitrarily imposing sweeping tariffs on the rest of the world. He reminds us America is still boss, claiming to ‘make America great again’ (MAGA) by ensuring ‘America first’ at everyone else’s expense.

Liberation Day?

His April 2 Liberation Day announcement triggered wild speculation over his proposal’s final form, implications, significance, and likely impacts, not only for the near future but also well beyond.

Since then, the world has been scrambling to understand better the president’s intentions to protect their interests. This has also triggered much talk about managing adjustment and enhancing resilience.

Shocked by his unilateral abandonment of the revised free trade agreement renegotiated during Trump 1.0, its North American neighbours were the first to engage publicly.

More recently, China’s ironically reciprocal response gave Trump another excuse for more punitively escalating his ‘reciprocal tariffs’. With little left to lose even before Trump’s latest tariffs against China, it said No to the Orange Emperor, switching the impact from manufacturing to agriculture.

Only major economies dare to retaliate. However, due to its geopolitics, including Trump’s demands for more ‘equitable’ NATO cost-sharing, an appropriately strong European response seems unlikely.

Many prioritise the Western alliance, while a few prefer other options. Sensing the ‘silence of the lambs’, the president has gloated over the steady stream of foreign leaders coming to ‘kiss my arse’.

Trump’s tariff fetish

The tariff announcement was not set in stone. It remains to be seen how much Trump’s support base, especially from the US corporate elite, will succeed in revising his measures.

He is unlikely to respond positively to opposition from abroad or even within the US. The tariffs will be tied up in legal and legislative procedures for some time, even after they go into effect.

The dissent of some Senate Republicans suggests the US Congress may reject the tariffs as a significant infringement on their Constitutional prerogatives.

Announced as executive orders, they are subject to judicial scrutiny. Of course, the White House will have to reconsider which battles to fight and which to concede without appearing to do so.

A face-saving compromise between the Republican-controlled Congress and the White House is increasingly likely. Attention can thus be diverted abroad to preferred targets such as China and Iran.

Some other countries, especially the BRICS, may also be hit to ‘save face’. The president can then claim he tried his best to MAGA but was foiled by foreign-connected opponents.

While Trump critics are making much of his subsequent revisions, concessions, amendments and postponements, the greater significance of his announcement lies elsewhere.

Divided we fall

Trump 2.0 will dictate the terms of US engagement with the world. He has already reminded everyone he is The Great Disruptor. Dismissing cooperation as for losers, his team’s purpose is to put others down.

Trump has subverted the World Trade Organization and all US-negotiated trade agreements except when it best serves its interests. He has given notice of selectively invoking multilateralism and the rule of law to serve his preferred interests best.

Although all European countries will be affected by Trump’s tariffs, each will be hit differently. Hence, developing a strong, unified European position will be difficult. This will deter other regional and plurilateral groupings from collective action.

In one stroke, Trump reminded the world that America remains number one and that he means business. Critics overlook his purpose and strategy by dismissing his methods and tactics as transactional, stupid or irrational.

Method to the madness?

Trump’s Council of Economic Advisors chairman, Stephen Miran, has offered an economic rationale for Trumponomics 2.0. He argues the world must pay for the ‘global public goods’ the US ostensibly provides, especially US military spending.

He also insists the US is doing the world a favour by allowing the US dollar to serve as the world’s reserve currency. He ignores how it earns seigniorage and the ‘exorbitant privilege’ of being able to issue debt to the rest of the world without having to repay.

His so-called Mar-a-Lago Accord purports to offer more financial stability through US dollar currency pegs and related digital currency arrangements, requiring payment flows to the US Treasury and Federal Reserve.

Trump has promised even more regressive tax reforms for the super-rich who generously funded his re-election campaign. As before, this will be obscured by some tax relief for the ‘middle class’.

The shift from potentially progressive direct taxation to more indirect taxation has already begun, with the proposed tariffs impacting purchases of merchandise imports.

Industrial policy redux?

Tariffs cannot simply restart long-abandoned production overnight. Earlier manufacturing jobs were lost to imports and the automation of production processes.

Reviving abandoned productive capacities and capabilities will mainly create poor jobs. ‘Fortress USA will attract some investments, mainly for the limited US market, but it cannot transform itself into the world’s manufacturing powerhouse it once was.

Recent reshoring efforts have proved embarrassingly unsuccessful. This has been evident with the difficulties of the forced relocation of the world’s leading (Taiwanese) semiconductor manufacturer to the US.

Trump’s turn to industrial policy is more backward-looking than progressive. It seeks to save uncompetitive old capacities rather than advance potentially competitive new investments, technology, productive capacities, and capabilities.

Also, investment and technology promotion need supportive policies, especially in human resources, research, and development, which are increasingly undermined by Musk-led government spending cuts.

Related IPS Articles

• America First Deepens World Stagnation

• Imperialism (Still) Rules

• An ‘Exorbitant Privilege’ for All?

• New Geopolitics Worse for Global South

• Western Finance Ruining Economies of the Rest

• The Global South in the New Cold War

• Global Poverty Grows as Super-Rich Get Richer Faster

Available online here: Trump's 'Shock and Awe' Tariffs

Malnutrition Not Due to Cash Poverty Alone

By Jomo Kwame Sundaram

KUALA LUMPUR, Malaysia, Mar 26 2025 (IPS) - The World Bank set its US ‘dollar-a-day’ poverty line using its 1990 data. Despite many doubts and criticisms, its poverty numbers fell until the COVID-19 pandemic began in 2020.

Cash measures

The Bank claimed credit for reducing poverty in the three decades before 2020, mainly due to rapid growth in China. But official poverty estimates elsewhere have generally declined more slowly, if at all.

Poverty has long been seen in terms of inequality, as people generally feel poorer compared to others. Meanwhile, explanations of poverty differ considerably, with many calling for better policy measures.

For decades, the Bank refused to address inequality, focusing instead on poverty. Efforts to improve poverty measurement have long been driven by the belief that policy cannot be improved without better estimating it.

Measuring or estimating cash incomes has inevitably been prioritised. But the focus on money incomes poses problems. Money measures of poverty can be helpful but also deceptive. For instance, many children from urban households with incomes above the poverty line remain undernourished.

However, incomes above any arbitrarily set poverty line do not necessarily ensure well-being. This has generated interest in poverty indicators other than money incomes.

Such criticisms reflect a money fetish and the widespread practice of measuring welfare, well-being and poverty in cash terms. Recognising the value of other poverty indicators is now uncontroversial.

Dimensions of poverty

Yet many still want a single composite multidimensional poverty index despite its well-known problems. A dashboard of several key dimensions of poverty, rather than a single composite index, offers much more relevant information to improve policymaking.

Aware of such problems and limitations, OECD and UN Member States have not approved of composite indices. Neither adopted the pioneering work on composite indices by the most influential statistician of both bodies.

Composite indices, such as the human development index, have only been adopted and used by UN funds and programmes, which do not require Member State approval or review.

Meanwhile, lower infant and maternal mortality have accounted for over 80% of improved life expectancy in many developing countries. Low-cost reforms for safer pregnancies and births have significantly extended average life spans at low cost.

Food security

The UN Food and Agriculture Organization (FAO) has long defined food-secure households as those with enough income to afford enough carbohydrates or dietary energy (typically measured in calories or joules) for a sedentary lifestyle.

Despite this low bar and its methodological problems and limitations, undernourished or ‘food-insecure’ households have increased worldwide since 2014, growing for years while the World Bank’s estimate of poor households continued to decline!

According to the Bank, the number of poor worldwide only increased for the first time since the 1990s during the pandemic, both absolutely and relatively. This discrepancy between multilateral poverty and undernourishment trends has triggered debates over the significance of different well-being and deprivation measures.

Various controversies and doubts about Bank poverty numbers have prompted many to regard undernourishment as a better indicator of deprivation and lack of well-being than the poverty measure.

Although income inequality trends are moot and the subject of much dispute and controversy, disparities worldwide have risen again in recent years.

Meanwhile, dollar billionaires have proliferated worldwide as inequality has worsened. As income and wealth inequalities worsen, some convergences have also occurred, causing both trends to be mixed and uneven.

With rural impoverishment spreading worldwide, urbanisation has grown while reducing rural food production for household subsistence consumption. Rural households typically produced food for own consumption by breeding animals, harvesting fruits and vegetables, or even gathering food available nearby.

However, urban areas offer far fewer subsistence production and consumption opportunities. Cash incomes and spending increasingly determine food consumption, including personal nourishment.

Nutrition matters

As man does not live by bread (‘carbs’, i.e., dietary energy from carbohydrates) alone, a more holistic approach requires a more comprehensive approach to human nutrition.

Comparisons of the physical development of children of food producers and cash croppers suggest that household money incomes have not always determined the nutritional status of many.

Food producers’ children are generally better off than those of cash croppers. Why? Probably, food producers are far more likely to provide adequate nourishment to their families regardless of cash incomes.

Thus, children of food producers meet many of their food needs without buying them on the market. Hence, the common presumption that higher cash incomes ensure well-being, including nutrition, is doubtful.

Malnutrition challenges our understanding of well-being and its complex determinants. Many now suffer malnutrition, not only due to both macro and micro-nutrient deprivation but also due to the growing significance of diet-related non-communicable diseases.

As with obesity and overweight, diabetes incidence has risen with new consumer preferences. Incomes, the media, and other influences increasingly shape lifestyles with significant consequences for nutrition and health, many of which are perverse.

Related IPS Articles

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• Build Healthy, Sustainable Food Systems to Fight Malnutrition

• Tackle ‘Hidden Hunger’ by Improving Food Systems

• Opinion: Better Nutrition for Better Lives

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• Tackle Malnutrition Now

Available online here: Malnutrition Not Due to Cash Poverty Alone