In 1975, Milton Friedman, the eminent Nobel Prize-winning economist, wrote the book "There's No Such Thing As a Free Lunch," popularizing a phrase that had been used for decades. Back then, restaurants would typically serve free food if one bought expensive drinks. Friedman's point was that the restaurants would bake food costs into the drinks tab anyway, so while the food was touted as free, it technically wasn't.
When President Trump announced his new tariff regime last Wednesday, we noted in an editorial that his ideas were nothing new: "Trump's belief that the average American worker has become a victim of globalization and the so-called free trade regime is genuine, and he has never wavered from expressing it, dating back to his interviews with Oprah Winfrey and Phil Donahue in the 1980s."
In remarks at the White House on Monday alongside Israeli Prime Minister Benjamin Netanyahu, Trump responded to European Union president Ursula von der Leyen’s offer to bring down the EU's tariffs to zero in exchange for the United States doing the same: "The European Union was formed for one reason... to rip off the United States”
Trump has long expressed grievances about the world taking America for granted. However, despite being a great communicator, Trump has not made a strong enough business case for why he feels that America is being ripped off.
On Monday, that task fell to his advisor, young, telegenic Stephen Miran, the Chairman of his Economic Advisory Council. Miran received a PhD in economics from Harvard University in 2010. There, he studied under Martin Feldstein, a conservative economist who held the same position when he served as the Chair of President Ronald Reagan's Council of Economics Advisors. Feldstein, along with Alan Greenspan and Arthur Laffer, is credited with turning America's economy around after the economic disaster of the Carter years.
Miran spoke at the Hudson Institute, a conservative think tank, to outline Trump's vision for "burden sharing" so that nations no longer get a free ride from America. Tariffs are just one solution. Miran laid out four other ways to pay back America for all that America has done for the world - primarily providing a military blanket as the world's superpower and enabling the dollar to be the world's reserve currency.
Trump's point has always been that America does much behind the scenes to get the world to wake up each morning and get on with life, but America remains uncompensated for it. Consider the supremacy of the dollar—how does the world pay America for the stability and assurance of knowing that a transaction will be completed if it is made in dollars?
On its face, the notion that America needs to collect a fee from the rest of the world to use the dollar may sound bizarre. However, we are used to paying institutions for convenience and safety when we enter into a financial transaction. Walk into a bank to send a relative $1,000 by a wire transfer. The bank will charge you a fee. Your relative will also likely pay a fee to receive the money. These transaction fees help subsidize the safe movement of funds from your account to your relative's account, complete with an audit trail if something goes wrong.
According to the Bank for International Settlements (BIS) Triennial Survey, the average daily turnover in global foreign exchange markets was $7.5 trillion in April 2022, with the dollar involved in 88% of all trades—equating to roughly $6.6 trillion daily—even when America was not a party to the transaction. This figure captures currency trading, including spot transactions, swaps, and forwards, much of which is tied to commercial activity like international trade and investment.
A subset of this is for actual global trade in goods and services, such as when a Brazilian merchant buys steel from a Chinese supplier. The World Trade Organization (WTO) reported that world merchandise trade alone reached $28.5 trillion in 2022, with services adding another $6.1 trillion, totaling $34.6 trillion annually. It amounts to an average daily volume of about $94.8 billion. The United States accounts for only about 12% of this global trade. The vast majority of the remaining trade is completed in dollars, even though America is not a party to the trade. [Other currencies like the Euro, Yen, Yuan, Swiss Franc, the British Pound, and the Russian Rouble make up the rest].
Countries trade in dollars because the United States government fully backs every dollar. The value of the transaction is not dependent upon some physical commodity like gold or silver but on the world's confidence in the U.S. government's stability, economic strength, and ability to honor its obligations. This confidence hinges on the perception of the dollar's brand as something people trust will hold value and be widely usable. The world rushes to buy U.S. treasuries whenever there is a global conflict, seeking a "safe haven."
The haven comes from America's vaunted institutions and rich history, America's criminal justice system based on our country's Constitution, and a perception that America is a country of laws. [During the last eight years, this perception that America is the gold standard for justice has suffered, with the Deep State engaging in lawfare against President Trump. But we digress.] Most importantly, America, with its military might of operating over 750 military bases worldwide, spread across at least 80 countries and territories, provides a security shield primarily for free. Some cost-sharing agreements do exist, but America largely foots the bill.
Miran suggested in his speech that with America facing a $36 trillion debt, America's goodwill alone is not sufficient. So, countries could begin sharing America's burden by accepting tariffs on their exports to America without retaliation, opening their markets to American goods and buying more from America, boosting defense spending (is the EU listening?), investing in and installing factories in America, or simply writing checks to the United States Treasury.
Credit President Trump for being bold enough to re-architect the global order and save America from its disastrous decisions over the last 40 years so that the United States will continue to be the country that every other country aspires to become.
TIPP Picks
Selected articles from tippinsights.com and more
Trump 2.0
1. Will Trump End The Fed Or Put Himself In Charge Of It?—George Ford Smith, Mises Wire
2. ‘HANG TOUGH’: Trump Administration Placates Americans As Stock Market Continues To Drop—Elizabeth Troutman Mitchell, The Daily Signal
3. Dem Senator Blocks Hundreds Of Trump Nominees Using Tactic He Once Called ‘Abuse Of Power’—Adam Pack, DCNF
World Affairs
4. Attack Yemen? Yeah, I Warned you, Mr. Trump—Larry C. Johnson, The Ron Paul Institute for Peace and Prosperity
5. Russia And The US Made “Three Steps Forward” After Two Days Of Consultations In Washington— Melkulangara Bhadrakumar, Ron Paul Institute for Peace and Prosperity
6. US To Have Direct, ‘High-Level’ Meeting With Iran—Virginia Allen, The Daily Signal
7. Germany Deploys Troops To Lithuania In First Permanent Foreign Deployment Since World War II—Wilson Beaver, The Daily Signal
8. Germany’s Migrant Policies Should Force Trump Into Action—Mary Rooke, DCNF
9. Well-Connected Billionaire Leveraged US Tax Dollars To Help Hamas Gear Up For Oct. 7, Lawsuit Alleges—Wallace White, DCNF
10. South Korea’s Flourishing Culture And Teetering Democracy—Katharine H.S. Moon, Project Syndicate
11. Western Green Mandates Push Africa Toward Moscow—Duggan Flanakin, CFACT
12. Hong Kong Ready To Ink Free Trade Pacts To Offset U.S. Tariff Risks—TIPP Staff, TIPP Insights
13. Energy Chief Chris Wright Confirms Trip To The Middle East—TIPP Staff, TIPP Insights
14. China To “Fight To The End” Against Trump Tariffs—TIPP Staff, TIPP Insights
Economy
15. Don’t Like Trump’s Plan For The Economy? Let’s Hear Yours—Victor Davis Hanson, The Daily Signal
16. Trumponomics: Do, Do That Voodoo That You Do. It’s Swell—Bob Maistros, Issues & Insights
17. Liberation Or Obliteration—Ron Paul, Ron Paul Institute for Peace and Prosperity
18. Economist For Former GOP President Says US Needs ‘Big Trade Deficit’—Mariane Angela, DCNF
19. As Tariffs Tank Markets, Economy Craves Tax Cuts—Deroy Murdock, The Daily Signal
20. U.S. Tariffs Of 104% On Chinese Imports Will Take Effect: White House—TIPP Staff, TIPP Insights
21. Devaluing The US Dollar: How To Make America Poorer Again—Daniel Lacalle, Mises Wire
22. Brit Hume Says Republicans May Have ‘Something Good’ To Brag About Next Year To Offset Tariffs—Mariane Angela, DCNF
23. What Trump’s Tariffs Mean For YOU—Tony Kinnett, The Daily Signal
24. "China Wants Badly To Make A Deal:" Trump—TIPP Staff, TIPP Insights
25. Trump Says South Korea Sending 'Top Team' For Trade Talks—TIPP Staff, TIPP Insights
26. Enough Is Enough! Better Late Than Never. Trump Tariffs Roll Back Decades of Kamikaze Trade Policy—Editorial Board, TIPP Insights
27. Musk Slams Trump Adviser Navarro, Defends Tesla—TIPP Staff, TIPP Insights
Politics
28. Oh, That Influence Peddling: Times Finds Evidence Suggesting Hunter Acted As Foreign Agent—Jonathan Turley, Ron Paul Institute for Peace and Prosperity
29. ‘CROSSED THE RUBICON’: Colorado House Passes Bill Treating As Child Abuse Dissent From Transgender Orthodoxy—Tyler O'Neil, The Daily Signal
30. How A Small State Made Big Strides On Election Integrity Laws—Fred Lucas, The Daily Signal
31. Georgia Bill Sparks MAHA Concerns About Alleged Chinese Poison Chemicals—Robert McGreevy, DCNF
32. FBI Promotes Key FBI Official In J6 Investigations, Sparks Online Backlash—Eireann Van Natta, DCNF
33. Chief Justice John Roberts Freezes Order Requiring Return Of Alleged MS-13 Gang Member—Katelynn Richardson, DCNF
34. House Leadership, Luna End Deadlock Over Proxy Voting—George Caldwell, The Daily Signal
35. Turley On Republicans’ Response To Liberal Judges: Cool Your Jets—George Caldwell, The Daily Signal
36. Conservative Group Aims to Countersue After SPLC Dragged It Through 9 Years, Demanded $200B in ‘Frivolous Lawsuit’—Tyler O'Neil, The Daily Signal
General Affairs
37. For All Its Flaws, American Health Care Gets A Lot Right—Robert Moffit, The Daily Signal
38. Newsmax Takes Center Stage On Stock Exchange—R.E. Wermus, The Daily Signal
39. Free Speech Thrives Online: Welcome To ‘Era Of Rumble’—Virginia Allen, The Daily Signal
40. Debunking Tornado Hysteria—Joe Bastardi, CFACT
41. NASA Nominee Plans To Prioritize America First Agenda In Space, Not DEI—Elizabeth Troutman Mitchell, The Daily Signal
42. The Federal Government Did Not Create The States—Wanjiru Njoya, Mises Wire
43. JD Vance Follows Through On GOP Convention Promise To Celebrate His Mom’s 10-Year Sobriety Anniversary At White House—Nicole Silverio, DCNF
