The first 100 days of the second Trump administration were a whirlwind. And Stephen Milan, chairman of President Trump's Economic Advisory Council, was at the heart of what he called “volatility.” Trump raised import taxes to levels not seen since the 1930s. And trade talks to roll them back are fluid and leave a trajectory of the US economy, consumer prices and global trade.
Milan, a PhD trained economist at Harvard University, famously for bringing up the idea of ​​Mar-a-Lago Accord to “restructure the global trading system,” is placed in a position to explain the president's thoughts and ultimate goals.
On Wednesday, the US and the UK announced the trade deal framework, and before trade talks between the administration and Chinese officials this weekend, Milan spoke with Times' Talmon Joseph Smith in the office next to the White House. And he stood by the president's unconventional movement.
The interviews have been lightly edited for length and clarity.
You say in the public that you are not on the negotiation team, but as an economist, do you think the country's economy can maintain what the Treasury Secretary calls China's current “emergency” level of tariffs?
Yes, well, the president acted at historic scope and speed, making sure that American workers were on a fairer ground than their trading partners. I don't think anyone can say that policy adjustments are not historical or extraordinary. As a result, there was volatility in the financial markets. While economic data also has volatility, I think it's important to understand that volatility doesn't necessarily mean anything big in the long run.
And is there a possibility that economic activity could be replaced by something else from one month? Yeah. Are businesses waiting to find out the outcome of the negotiation? Yeah. Are they waiting to learn that the tax bill has been passed and that the President's 2017 tax cuts will not expire, so they intend to avoid the biggest tax hike in history next year? Yes, they are waiting for that too.
But when you wait for a decision, as you are waiting for information, that doesn't mean you will postpone that decision forever.
In China, specifically, the president in the past few days said it doesn't even have to make a deal. It leaves me with participants in the market that I am very confused and very afraid of consumers.
So the president said two things. He said, I think we'll do the deal. He says this many times. Second, no transaction is required. They are both true.
You all took office behind the scenes of frustration over the cost of living and inflation costs. The height of that list was residential. So, what is the administration's policy to address housing shortages?
Economic regulation is preventing businesses from generating what they can to increase their supply. If you're not supplying something well, if the price is too high, the best thing to do is to keep the government out of the way and let the businesses do more. And that's why the Trump administration is engaged in a government-wide deregulation drive.
Some previous administrations and Congress were bipartisan-based, aiming to give “carrots” to jurisdictions that decided to commit to federally-led policies, for example, to remove certain regulations and zoning in ways that could allow more buildings, and withhold additional funds from jurisdictions that did not. Are there any similarities from you in that trend, or do you see it as a state or local issue that doesn't relate to what you're doing from the White House?
No, we believe we can encourage our deregulation agenda to follow states and regions.
But I'm asking specifically amid housing regulations and zoning.
If other jurisdictions follow it, that's useful.
What to suit? Maybe because this is my ignorance, but I have never seen anything from this White House before. Certainly, it's quick.
No, you're right. You are right. You are right that it's quick and we are focused on trade. We've been focusing on tax bills.
Why did Doge fail to meet the stated savings goals? Because there is a shortage from the signs promised.
I think even reducing hundreds of millions is a huge achievement. I think Doge did an amazing job.
The administration's major goal is to reconcile manufacturing. There was a boom in manufacturing and construction from around 2020 to 2024. Since the fall it has fallen. Should we expect manufacturing construction to surge again as a barometer of the administration's success?
I think there will be a surge in manufacturing construction that I expect as a result of our policy. Incidentally, it's not just trade and isolation, but trade, taxes, and deregulation, right? And if you make the US a more competitive environment by reducing regulations that make it easier to build things here, reducing things here, dealing with asymmetry, and providing further tax easing by opening trades through tariffs, negotiations and other policies, you make the US a more competitive place.
Fixed-income investors based in Asia and Europe say they will gradually revolve from US assets, including bonds. Do you think they're exaggerating? Or are market commentators covering these moves exaggerating the extent of it? And secondly, do you all welcome the weakening of demand for the dollar?
Second, you need to lead you to a colleague a few blocks below the Treasury. As I said before, with regard to the first one, it is not surprising that it was truly a historically extraordinary policy change, and as a result, there was financial market volatility.
However, once the dust settles, capital follows investment opportunities. Investment opportunities are a function of economic opportunities, and that's why President Trump is focusing on creating the most dynamic American economy in history.
In an interview with the “report” the president said, “We were losing hundreds of billions of dollars with China. Now, we essentially don't do business with China, so we're saving hundreds of millions of dollars. That's very easy.” That's inaccurate, right? When you are advising the President, do you feel comfortable redirecting or fact-checking him, if he's done things wrong, or when?
So I don't think the president was wrong. You know, America had a trade deficit. And if trade declines, if trade with China declines, that portion of the trade deficit can fall.
“We've lost hundreds of millions of dollars in China. Now, we're essentially not doing business with China.” So are we saving hundreds of millions of dollars? Do you think that is an accurate expression of how to talk about trade deficits?
That's how the president understands it. And I think that's correct. I think the president is right.
Congress is now trying to get over its budget. I know you're not responsible for Congress, but the administration has spoken about its commitment to lower the deficit, but I also want tax cuts and a trillion dollar defence budget. So, how will it be?
So a few things. One is that higher growth constitutes revenue. And I think a lot of people consistently underestimate it and consistently wrong. There was no evidence that tax revenues had declined over the long term as a result of the TCJA, the president's tax cut. Economic growth was one of the best ways to increase revenue, and that was the president's first experience with tax cuts.
How is it maintained that tariffs are sufficient to generate hundreds of billions of dollars in revenue, consistent with the President's commitment to reduce costs for businesses and consumers?
Because I don't think tariffs will really raise costs in the end. I think volatility is possible in the short term, but in the long term, American consumers are flexible about where we import, and I think one country can enter into a trade agreement with us, thereby opening up the market and exporting it into the economy.
But many cargo experts think you're wrong. That supply chain takes months to move if not years. Therefore, there is no substitute.
Instead of buying things from China, we were able to buy things from other countries. Or you can make things here. You can turn demand into borders. It makes us more resilient.
It's true that we're early and there could be volatility in the short term, but have you been talking for a few weeks? Are we talking about a few quarters? Are we talking about a few years?
The economist hit something that he really couldn't settle down. As you know, the truth is different for each product, right? It is also likely to be relatively easy to switch between some products and suppliers. Other products, it may take years. And that would be different.
Do you need to understand from this administration, and from you, that the President is seriously dead about sorting the world trade markets, and that there will be no major drawback from this attitude?
The president makes clear that there may be confusion. And he talked about the dolls – he talked about other things. I think he'd done this a long time ago.
Concerns about the dolls – the president said that they only get a few or three young girls, not 30 – means people are even more concerned about important inputs to US manufacturers. Approximately 40% of them use imported parts or finished products.
The president says there could be confusion. And there are now many negotiations with 20 different trading partners. The President is one of the greatest negotiators in American history.
I spoke to many economists. I think you are friendly to many people, like many who think that you are willing to give up your intellectual integrity in order to take this position and bend facts and economic principles in the service of this administration's political goals. How do you respond to that view?
I think that's ridiculous and I think it's very common for people to project their political preferences onto others. The administration focuses on creating a dynamic, healthy and robust economic boom for Americans. And we're going to do that.
Thank you for reading! See you on Monday.
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