Bloomberg Audio Studios, podcasts, radio news. Before November last year, Stephen Myron was a little not economist. He served as a senior advisor at the US Treasure Department during the first Trump administration. Until recently he worked as a strategist at an investment firm with a focus on global economic policy. But a week after the election, Myron's work blew up, specifically a forty one page paper called a User's Guide to Restructuring the Global Trade System, which went the finance
world's equivalent of viral. Big players like Apollo Management and JP Morgan Chase had a lot to say about Myron's report, and that spawned a frenzy of interpretation of Myron's thoughts on tariff hikes, weakening the US dollar, and a so called mar A Lago accord on currency intervention.
And then, oh, and I swear in the nominees. Would you all please stand and raise your right hand.
Stephen Myron was before a panel of Senators vetting him to serve as the chair of President Trump's Council of Economic Advisors.
It is an honor surpassing any I ever expected to be here before you today as President Trump's nominee to lead his Council of Economic Advisors.
That council, the CEA, gives advice to the president on international and domestic policy.
My view is that reindustrializing America is imperative not only for economic reasons, but for national security.
Less than two weeks later, Myron's nomination was confirmed. I'm Saliah Mosen and this is the Big Take DC from Bloomberg News.
Today.
On the show, I talk with Steve Myron about his ideas on how the US could reshuffle the economic world order and how he thinks Trump's tariffs could actually work.
We get the view on the economic outlook from the White House now with the chair of the Council of Economic Advisors, Stephen Myron, sitting down here in our Washington, d C. Studio with our colleague Bloomberg's Salaiya Mosen.
Seleia, we have Stephen Myron here with us.
Stephen, you are are the one of the top economists at the White House right now, welcome to Bloomberg. You're serving in this role at a tenuous moment for the economy. We saw last week the Federal Reserve officials there cut economic growth outlook, also citing inflationary risks, mostly from Trump's trade policy. And I want to know, do you think that the FED has gotten the effects of tariffs on the economy?
Wrong?
Thankslea. It's great to be here, so thanks for having me. Look. Yeah, I think that folks that a lot of folks have got the effects of tariffs wrong. I think there's quite a bit that people missbat tariffs. The number one point that I make about tariffs is a general point about economics, which is that when you think about any economic policy,
a teriff attacks anything else. Right. The economists believe that the party that bears the burden or the benefit of that policy is the party that's more inflexible, because if you're flexible, you can change your behavior to avoid the costs. And so think about it this way. If you are buying a house, and you know the town that you're looking at raises property taxes, right, you say, Okay, maybe I'm gonna look at the next the house in the next town over, right. Whereas so you can adjust your
behavior flexible. Where's the seller of that house is inflexible. They already own it, so they have to drop their selling price. So in this example, economists would say Okay, the seller of the house ends up bearing the increase in the property tax. And you have to think about tariffs the same way. US consumers are flexible. We have options. We can produce stuff at home, we have a variety of countries, we can import stuff, we can substant into
home production. Whereas countries that sell to the United States are inflexible. They've only got the United States to sell to. There's no alternative, So they're the ones who will bear the burden of this of these tariffs, which means that there's going to be very limited passed through into downside economic risk or into higher prices. So I think that a lot of folks have got that wrong.
But even Trump and his advisors included in your colleagues that Elon Musk, Scott best in the treasure Secretary and others are signaling a no pay, no gain concept here that for all a little while, things could get bumpy in the economy.
Yeah, so there are some risks in the economy, but I think those risks predominantly derived from the transition from an economy which was primarily government driven, to an economy that's primarily private sector driven, and that might contribute to make to make things bumpier and less robust in the
short run. And just to give you one number that's a great example of that is if you look at the shares of the share of jobs created in twenty three, twenty twenty three, and twenty twenty four, so the second half of the Biden administration, when COVID is over, and it's really just a result of bidenministration policies, seventy three percent of all jobs created in those two years were
due to government and government adjacent sectors. By government adjacent, I mean sectors like education, sectors like healthcare, social assistance. These are sectors of the economy that derive a very large or maybe even in some of them, the majority of their financing ultimately from the taxpayer through direct transfers or substies. So three quarters of jobs created in the last couple of years came from basically, you know, sort
of government expenditures and taxpayer subsidies. So it is a brittle economy as we transition away from that to the private sector.
But the FED and you know FED officials are correct, then that there will be at least short term pain as tariffskick in.
So I don't think that there's gonna be material short term pain from the tariffs. I think the short term pain is coming from the reorientation of the of the economy from the government to the private to the private sector. Now, of course, you know, as you know, the tariff situation is still developing, and the President will decide what he wants to. The President will decide what the tariffs are on April second, and has been very clear telegraphing that let's.
Talk about the tariffs, what's coming down in April second, that the President has tasked his advisors and his team with an immense job here to come up with these tariffs for next week. What can you share about the contours of this. Should we expect country by country tariffs, sectoral tariffs being announced?
Sure? So, Look, you know, it's important to calculate a whole variety of things when you're thinking about non terrort, sorry, when you're thinking about tear about fair and reciprocal tariffs. Those include outright teriff rates that are the country's charges, and they also include non tariff barriers right ways that countries prevent us selling our experts into their markets through
means other than tariffs. Through not opening their markets, through intellectual property theft or or or lack of enforcement, through currency changes, through regulatory you know, regulatory differences that prohibit our products from entering their markets. And you have to consider this entire host of things, right, and so the the dimensions of analysis can get really big, really fast.
Now that goes at odds with another principle, which is that simplicity is great, right, and so the you know, simplicity is a virtue when you when you think about these things in one in one sense, because it makes it more difficult for other countries to gain. Now the situation is developing, you know, the team and the pre and the president are entertaining or entertaining options. It would be wrong for me to get ahead of that, but you know, we'll we'll find out soon.
Coming up after the break, I asked Steve about the November paper that launched him into the spotlight and whether we should expect what he calls a mar a Lago accord on currency intervention sooner rather than later. Stephen, the other thing that a lot of people here at Bloomberg have been talking about is this paper that you wrote in November, after elections, but before you were nominated to be cechair.
The title of this paper was a.
User's Guide to Restructuring the Global Trading System, and it has caused a stir. You talk about some unorthodox policies like revaluing US gold stocks, applying a user fee to treasuries, and a new global currency accord.
Can you tell me how much of this is in the works now?
Yeah, So I'm glad you brought that up, because this paper seems to have taken on a life of its own against all my intents. Look, I'm pretty clear in that paper that it's a catalog of available options, and you know, it's a recipe book, and I'm trying to evaluate how useful or not useful, or easy or difficult those various recipes are to make. Some of them are easy, some are tough, some are you know, you know, some are are are filling satisfying meals, and some will leave
you hungry again in a half an hour. And my goal in that paper was to provide an evaluation of options that a cost benefit analysis of risks and rewards, so that whoever was making a decision, you know, sort of could have that available if if if helpful, To be clear, you know, I'm not the chef, right, the president is the chef. And he's been very clear, very clear that he's focused on fair and reciprocal tariffs. Uh,
he couldn't be clearer. And so anybody who's anybody who's thinking that that something that I that I included in a catalog in November is the source of is what the policy agenda is? Now? You know, I think I think that's wrong.
So tell me a currency accord, A mar Alago accord? Is that currently in the works.
The President's been very clear that he's focused on fair and reciprocal tariffs, and you know that's what that's what that's what the team is working on.
Is it a twenty twenty six goal? Did you a currency pact?
I mean, look, I would look at it this way. I would look at it as the United States has been running very significant trade and current account deficits for a very long period of time. Those are very costly to us economically, they're very they're very costly to disproportionately costly to to some parts of the country that are reliant on manufacturing and reliant in exports. And there's a variety of means of of trying to address that problem. Right.
The President very clear that he wants to start with tariffs, and that's what that's what we're doing, right We are starting. We are starting with tariffs. We have been moving in tariffs. We are going to continue moving on tariffs. April seconds is around the corner, and that's the sole focus right now. Could it be something that is entertained down the road, Sure it could, but right now the President is focused on tariffs.
In the paper, you talk about an overvalued dollar. Is that still the case?
Look, another thing that I think most of the nonmals profession gets wrong about tariffs is that all of these models of international trade all assume that trade eventually balances, and that if you run a trade deficit, the dollar will weaken and that will restore the trade deficit to balance. If you run a trade surplus, the dollar will strengthen
and that will restore the trade surplus to balance. And so therefore the currency will adjust to balance trade over time, and there's no need for tariffs because the economy is basically self adjusting, self equilibrating, as an economist would say. However, it seems very clear that that's not the case. We've been running current account deficits for five decades now, and
they only get worse in dollar terms and percentage terms lately. So, you know, I think it's very clear that that standard model of the economy that assumes away the need for tariffs is wrong because we have been running those persistent, those persistent current account and trade deficits. If the dollar were able to weaken to equilibrate trade, then we wouldn't
have a lot of the to balance trade deficits. Then we wouldn't have a lot of the problems that tariffs and other policies are designed to address, because expert US experts would be more competitive on the global stage and we wouldn't be as cheated by other countries.
Trump has talked a lot about maintaining the dollar as the world's reserve asset, but also there's a desire for a weaker exchange rate.
Aren't these dueling forces.
So there's a variety of means which you can take to try to address the problems in demand, which the allocation of demand across countries, which leads to the persistent trade deficits that we have in the United States and that we have had for decades. In the United States. There are various means of doing so right. Some of these means go down different paths right, and some of these means would be dollar positive, some of these means
would be dollar negative. And again, the point of the esset that I wrote in November was to evaluate the variety of paths. And just because there are many ways to get to an end result doesn't mean you want to take all the paths at once. I mean you can't cut yourself in half.
This is The Big Take DC from Bloomberg News. I'm Salaia Mosen. This episode was produced by Alex Tie. It was edited by Patti Hirsch and Chris Anstey. It was fact checked by Adriana Tapia and mixed and sound designed by Alex Sugia. Our senior producer is Naomi Shaven. Our senior editor is Elizabeth Ponso. Our executive producer is Nicole Beamster Bower, and Sage Bauman is Bloomberg's head of Podcasts.
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