According to Bloomberg, Apple customers lined up to buy new iPhones, fearing the company might raise prices to offset US President Donald Trump’s tariffs.

Employees at stores across the US said they were bombarded with questions about potential price increases and witnessed customers buying phones in a panic.

Although Apple declined to comment to Bloomberg, retail stores reportedly had higher sales last weekend compared to previous years.

According to a report published by TechInsights, the new tariffs that Trump imposed on Chinese goods mean that the cost of producing an iPhone for Apple could increase from $580 to $850.

Apple will likely avoid immediately raising the price of its flagship product (which it has kept at $999 since 2017), but iPhones account for 50% of its total revenue.

One of the steps Apple could take in this situation is to lobby for exemption from tariffs.

On the other hand, considering that the White House has increased the tariff it applies to China to 104%, it does not seem very likely that an exemption will be granted through China.

Meanwhile, Apple announced that it would temporarily supply more iPhones from India, which faces a tariffs of about a quarter of that of China.

Although the technology giant will probably not completely renew its supply chains, it has been producing some of its products in Vietnam, Ireland, Thailand, and Malaysia for the last few years to reduce its dependence on China.

Despite Trump’s goal of bringing production to the US, it is not realistic to expect Apple factories to open one after the other in the US in the short term. According to Wedbush analyst Dan Ives, moving iPhone production to the US is not only impossible, but could also increase the price of the smartphone to $3,500.

US President Donald Trump’s decision to initiate a trade war and impose tariffs impacting the global economy prompted accusations of “irrational economic policies”—a critique often heard in Turkey.

According to this perspective, Trump was perceived as a reckless autocrat imposing tariffs out of sheer ignorance. Alternatively, as renowned “new Keynesian” economist Paul Krugman stated, Trump was “crazy” regarding trade, and his “malignant stupidity” threatened the global economy.

This analysis does not attribute vast knowledge or profound wisdom to Trump, as subsequent points will clarify. Furthermore, the method for determining the tariffs has been described as somewhat “childish.” Additionally, this series will later delve into significant objections to “Trumponomics” and its inherent contradictions.

However, certain complexities may lie beyond Trump’s personal grasp, necessitating his team of advisors. If not a mad autocrat, perhaps Trump resembles an uninformed elephant in a china shop—useful, in this view, precisely for his capacity to disrupt the status quo.

Consequently, there are indications suggesting some underlying “intelligence” behind events like the rapid evaporation of trillions of dollars from stock markets within a week. Historical parallels exist. In his memoirs, President Herbert Hoover recalled his Treasury Secretary during the Great Depression, Andrew Mellon, advising: “Liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate… [The Depression] will clean out the rot in the system. The high cost of living and the high level of living will fall. People will work harder and live more moral lives. Values will adjust and enterprising people will pick up the debris of less competent people.”

The White House summary accompanying the official announcement of global tariffs highlighted a familiar, ostensible policy rationale: the so-called globalization process, it argued, no longer served the interests of the US and American workers, particularly within the manufacturing sector. This justification aligned with efforts toward reshoring production and implementing domestic tax cuts.

This, naturally, represents the surface narrative. Delving deeper, three figures emerge as prominent sources of “economic wisdom” within Trump’s White House: Stephen Miran, Chairman of the White House Council of Economic Advisers; Scott Bessent, Secretary of the Treasury; and Peter Navarro, Trade Representative.

This article focuses on a 41-page report authored by Miran—then a strategist at Hudson Bay Capital, a hedge fund managing $30 billion—published in November, shortly after Trump’s election.

In the memorandum, titled “Guidelines for Restructuring the Global Trading System,” Miran aimed to persuade “markets” of the feasibility of tariffs.

Miran began, “We may be on the verge of a generational shift in the international trade and financial systems,” noting that ‘reforming the global trading system’ and ‘the desire to put American industry on a fairer footing vis-à-vis the rest of the world’ had been a ‘consistent theme’ for Trump for decades.

“There is a way in which these policies can be implemented without significant negative consequences, but it is narrow,” the strategist stated, acknowledging the difficulty of the task.

But here the core argument surfaces: “Economic imbalances are rooted in an overvalued dollar that prevents international trade from stabilizing, and this overvaluation is driven by inelastic demand for reserve assets. As global GDP grows, financing reserve assets and the defense umbrella becomes increasingly burdensome for the United States, with the manufacturing and tradable sectors bearing the brunt of the costs.”

This overvaluation, according to the argument, renders US exports less competitive, cheapens imports, and consequently undermines American manufacturing—the fundamental points being made.

This assessment of the dollar, I should note, is more prevalent than commonly assumed, a point discussed recently with economist Radhika Desai. Furthermore, reports indicate that Vice President JD Vance shared a similar perspective, attributing the dollar’s overvaluation to its global reserve currency status.

As will be discussed, a consensus apparently exists between Miran and Bessent that tariffs alone are insufficient. Miran explicitly writes about desiring an “adjustment”—specifically, an exchange rate realignment between the dollar and foreign currencies: “While currency offsets can impede the harmonization of trade flows, they show that tariffs are ultimately financed by the tariff-subject country, whose real purchasing power and welfare are reduced, and the proceeds improve burden sharing to provide reserve assets.”

The implication is that the negative impacts of tariffs are offset because the burden shifts. According to Miran (who holds a Harvard PhD in economics), this mechanism would not harm the purchasing power of American consumers. Instead, as citizens of exporting nations targeted by US tariffs face reduced purchasing power due to currency shifts, their country effectively ‘pays’ the tariff burden, while the US Treasury gains the revenue.

Miran stated, “From a trade perspective,” the dollar’s overvaluation stems “‘largely because dollar assets function as the world’s reserve currency.’” This aligns with the argument attributed to JD Vance.

Since the US supplies the world with reserve assets, demand exists for the dollar and US Treasuries independent of trade balancing needs or the optimization of risk-adjusted returns. These reserve functions facilitate international trade and offer a vehicle for substantial savings pools, frequently held for “policy reasons” (like reserve or currency management, or by sovereign wealth funds) rather than purely for yield maximization.

Consequently, much of this reserve demand for dollars and US bonds is inelastic concerning economic or investment criteria. Miran provided an example: Treasury bonds purchased to guarantee trade between Micronesia and Polynesia are acquired irrespective of the US trade balance, recent employment data, or the relative yield of Treasuries compared to German Bunds [government bonds].

Such phenomena, the advisor noted, reflect what can be termed a “Triffin world,” named after Belgian economist Robert Triffin. In this framework, reserve assets constitute a form of global money supply. Demand for these assets is driven by global trade and savings levels, rather than the reserve-issuing country’s domestic trade balance or investment appeal.

Within this model, the US runs large current account deficits not primarily because it imports excessively, but rather because it must import sufficiently to issue the US government bonds needed to supply reserve assets and thereby facilitate global growth.

According to Miran, reserve currency status yields three significant consequences for the issuing nation: somewhat cheaper borrowing costs, a more expensive currency, and the capacity to leverage the financial system for security objectives.

This overvaluation, Miran argued, imposes a heavy burden on the American manufacturing sector while simultaneously benefiting the economy’s financialized sectors, primarily advantaging wealthier Americans. The hedge fund manager’s critique of the financialization trend characterizing the past 40 years of capitalism sounds almost left-leaning.

Miran further clarified that the issue involves a “response to a crisis.” During crises, the dollar’s reserve nature places additional strain on manufacturing and export sectors. The dollar typically appreciates during recessions due to its “safe” haven status, while other currencies tend to depreciate during economic downturns.

Consequently, when aggregate demand declines, the difficulties faced by export sectors are exacerbated by a sharp erosion of competitiveness. This dynamic helps explain why US manufacturing employment often falls sharply during recessions and struggles to recover substantially afterward.

However, a contradiction arises: President Trump reportedly valued the dollar’s reserve status and even threatened punitive action against countries, notably the BRICS group, that might reduce their reliance on the dollar. How can this tension be reconciled? Miran proposed “a set of policies to increase burden-sharing among trade and security partners.” He elaborated: “Instead of trying to end the use of the dollar as the global reserve currency, the Trump Administration could try to find ways to claw back some of the benefits that other countries derive from our reserve status. A redirection of aggregate demand from other countries to America, increased revenue to the US Treasury, or a combination of these could help America offset the rising cost of providing a reserve asset for a growing global economy. The Trump Administration is likely to increasingly intertwine trade policy and security policy, seeing the provision of reserve assets and the security umbrella as interdependent and approaching burden-sharing for them together.”

As mentioned earlier (paragraph 25), reserve currency status has three key elements. One is the capacity to control financial flows. According to Miran, the negative consequences (like diminished export capacity) were historically balanced by the advantages of US dominance over global finance. This financial control conferred a “geopolitical advantage,” allowing the US to pursue national security goals cost-effectively. The US provided a global defense shield for “liberal democracies,” receiving the benefits of reserve status in return. In essence, reserve status has long been interwoven with national security considerations.

Miran suggested that Trump was reacting to a perception that these arrangements had become burdensome for the US. “This connection helps explain why President Trump thinks other countries benefit from America in defense and trade at the same time: the defense umbrella and our trade deficits are linked through currency,” the consulting economist wrote. He further explained: “In Triffin’s world, this [global] arrangement becomes more difficult as the United States’ share of global GDP and military power shrinks. As the economic burdens on America increase, with global GDP outstripping American GDP, it becomes more difficult for America to finance global security because the current account deficit grows and our ability to produce equipment is undermined. The growing international deficit is a problem because of the increasing pressure on the American export sector and the resulting socio-economic problems.”

The US is either unable or unwilling to sustain the existing global arrangement and therefore seeks to alter it. This constitutes Miran’s first key point.

The US dollar functions as a primary reserve asset largely because America offers “stability, liquidity, market depth and the rule of law.” These attributes underpin the nation’s capacity to project power globally and to shape and defend the international order. This is Miran’s second key point.

The link between reserve currency status and national security is long-established. As the Trump administration sought to reshape the global trading system, these connections were expected to become even more salient. This represents the third key finding. Therefore, the situation entails more than simply a move toward economic isolation for the dollar and the US.

Both tariff and exchange rate policies, in this framework, aim to enhance the competitiveness of American manufacturing, thereby strengthening the industrial base and shifting aggregate demand and jobs from other countries to the US.

Miran emphasized that the goal was not to repatriate labor-intensive sectors like textiles from countries such as Bangladesh. Rather, the tariffs were intended to preserve American dominance in high-value-added industries, halt the further exodus of manufacturing, and create negotiating leverage. This leverage could be used to compel other countries to open their markets to American exports or to better protect American intellectual property rights. Key sectors linked to national security included semiconductors and pharmaceuticals.

Yet, the fundamental contradiction persists. Miran, however, expressed confidence in the Trump administration’s approach. Acknowledging the inherent tension, he wrote: “Despite the dollar’s weight on the US manufacturing sector, President Trump has emphasized the value he places on its status as the global reserve currency and threatened to punish countries that move away from it. I expect this tension to be resolved through policies that seek to preserve the dollar’s status but improve burden sharing with our trading partners. International trade policy will seek to recapture some of the benefits to trading partners of our reserve status and link this economic burden sharing to defense burden sharing. Although the effects of Triffin will have a negative impact on the manufacturing sector, there will be attempts to improve America’s position in the system without destroying it.”

Burden sharing: Pillar of restructuring

In his inaugural speech as Chairman of the White House Council of Economic Advisers, Stephen Miran revisited the themes from his November report.

Miran elaborated on the specifics of burden sharing, arguing that other nations should shoulder a greater portion of the costs associated with the global “public goods” the US has historically provided.

Within the economic framework of Trumpism, as articulated by Miran, the United States was portrayed as a “sucker”—providing a global reserve currency and a worldwide defense umbrella without receiving adequate reciprocation from other nations.

“President Trump has made it clear that he will no longer tolerate other nations freeloading on our blood, sweat and tears, whether in the area of national security or trade,” President Miran said at the Hudson Institute.

He continued, “While it is true that the demand for the dollar has kept our borrowing rates low, it has also distorted foreign exchange markets. This process has imposed unnecessary burdens on our companies and workers, making their products and labor uncompetitive on the global stage.”

Miran acknowledged the benefits of financial hegemony but contended the associated burden on the US had become excessive. He argued that other nations invested in American assets and manipulated their currencies to gain export advantages. Furthermore, he attributed partial blame for the 2008 financial crisis to Beijing, asserting that China had fueled the preceding bubble by purchasing vast quantities of US mortgage-related debt.

Miran proposed five specific options for achieving burden-sharing:

First, other countries could accept tariffs on their exports to the US without retaliating, thereby providing revenue to the US Treasury to help finance global public goods.

Second, they could cease perceived unfair and harmful trade practices by opening their markets further and increasing purchases from America.

Third, they could increase their defense spending, including procurement from the US. Purchasing more US goods would theoretically ease the burden on American military personnel and create domestic jobs.

Fourth, foreign nations could increase investment in America, including building factories. Goods produced domestically would not be subject to the proposed tariffs.

Fifth, they could directly contribute to financing global public goods by “writing checks” to the US Treasury.

Miran concluded: “Burden sharing can ensure that the United States can continue to lead the free world for decades to come. This is an imperative not only for fairness, but also for viability. If we do not rebuild our manufacturing sector, we will struggle to provide the security we need for our safety and to support our financial markets. The world can still have the American defense umbrella and trade system, but it must start paying its fair share for them.”

Interpretation: The underlying message is that the entire world—all other capitalists included!—must participate in reconstructing the American economy. This, the argument implies, is necessary to break the deadlock in the global capitalist system, allowing the US to resume its role as a global ‘gendarme’ guaranteeing capital accumulation and protecting the interests of propertied classes internationally.

The subsequent article in this series will examine the perspective of Scott Bessent, identified here as Treasury Secretary.

The market collapse, triggered by US President Donald Trump’s tariffs, deepened on Monday after the President signaled he would not back down from aggressive trade policies despite growing fears of a global recession.

Stocks fell sharply, while currencies rose and bond yields declined. Contracts tracking the S&P 500 fell by 3.2%, while those for the Nasdaq fell by 4.1%. Asian stocks were shaken, with Hong Kong’s Hang Seng index falling by more than 10%.

European stocks declined at the opening on Monday, with the Stoxx Europe 600 index falling by 6.2% and Germany’s Dax index falling by 10%. The index in Frankfurt fell by around 9%, while the share value of the German arms company Rheinmetall, whose shares soared with the war in Ukraine, is heading towards disaster with a 27% decrease.

The heavy declines came as Goldman Sachs raised its probability of the US entering a recession from 35% to 45% following “a sharp tightening in financial conditions” after Trump imposed sweeping tariffs on US trading partners last week.

Trump said on Truth Social on Sunday night, “We have large financial deficits with China, the European Union, and many other countries. The only way to solve this problem is with TARIFFS, which are now making the US Tens of Billions of Dollars… They are already in place and a beautiful thing to see.”

When Trump was asked by reporters about the market declines, he said, “Sometimes you have to take medicine in order to fix something.”

More than $5 trillion was erased from the S&P 500 index on Thursday and Friday, capping off the worst week for the index since the start of the coronavirus pandemic in 2020.

As markets fell, even supporters of the US President voiced concerns about the White House’s trade agenda. On Sunday, billionaire investor Bill Ackman wrote on X, “By imposing large and disproportionate tariffs on both our friends and our enemies… we are in the process of destroying confidence in our country as a trading partner.”

Ackman also attacked Commerce Secretary Howard Lutnick for being “indifferent to the collapse of the stock market and the economy,” claiming that Lutnick and his company, Cantor Fitzgerald, make money by holding fixed-income assets.

The price of safe-haven bonds, such as US Treasury bonds, had risen during the stock selloff over the past few days. Ackman said that Lutnick “profits when our economy collapses.”

Billionaire hedge fund investor Stanley Druckenmiller also expressed his opposition to Trump’s tariff regime, saying on X, “I am not in favor of tariffs over 10%.”

The benchmark 10-year US Treasury yield, closely watched by Trump administration officials, fell 0.08 percentage points to 3.91% on Monday as investors globally flocked to bonds.

Japan’s 10-year JGB yield fell 0.07 percentage points to 1.11%, while China’s 10-year yield fell 0.09 percentage points to 1.64%.

Two global banks based in London took a heavy hit. Shares of HSBC and Standard Chartered both fell about 16% in Hong Kong trading.

According to Bloomberg Intelligence, their exposure to emerging markets and recent strategic pivot to Asia makes these banks particularly vulnerable to a trade war.

Commodities also continued to suffer heavy losses, with West Texas Intermediate, the benchmark for US oil prices, falling 3.4% to $59.80 a barrel. International benchmark Brent crude fell 3.4% to $63.35.

LME copper, widely seen as a bellwether for growth due to its industrial use, fell more than 7% to $8,690 a ton. Bitcoin fell 0.8% to $78,198 a token.

The US dollar fell 0.3% against a basket of its largest trading partner currencies, while the Japanese yen rose 0.8% to 145.6 yen per dollar. Chinese authorities set the offshore renminbi at its weakest level since early December at 7.19 Rmb per dollar.