President Trump is adamant targeted countries will pay for his tariffs . His argument has faced plenty of scorn from mainstream economists—many of whom also maintain that Americans, already weary from the country’s recent bout with inflation , will bear the brunt of higher prices. Respected names on Wall Street who have gone to work for the president, most notably Treasury Secretary Scott Bessent, argue that need not be the case.

Markets have been unconvinced , with stocks repeatedly selling off amid Trump’s on-again, off-again threats and, despite Wednesday’s rebound, more than erasing the gains from their post-election rally. As trade war and recession fears mount, the president’s chief economist has laid out a blueprint to implement sweeping tariffs without causing inflation. Shortly after Trump’s election victory in November, Stephen Miran, who the Senate confirmed Wednesday as chairman of the Council of Economic Advisors, wrote a dense 40-page memo titled, “A User’s Guide to Restructuring the Global Trading System.”

“There is a path by which these policies can be implemented without material adverse consequences, but it is narrow,” Miran, then a strategist at $30 billion hedge fund manager Hudson Bay Capital, wrote.

Miran’s vision largely depends on how tariffs theoretically make the dollar stronger relative to foreign currencies. When imports from China become more expensive, for example, less demand for the country’s goods means the value of the yuan compared to the dollar should decline.

In an ideal scenario, that means the tax increase paid by U.S. importers is offset by a cheaper exchange rate.

“American consumers’ purchasing power isn’t affected, since the tariff and the currency move cancel each other out,” Miran, who obtained his Ph.D. in economics from Harvard, wrote, “but since the exporters’ citizens became poorer as a result of the currency move, the exporting nation ‘pays for’ or bears the burden of the tax, while the U.S. Treasury collects the revenue.”

In his memo, Miran insisted his analysis is “not policy advocacy” and acknowledged these assumptions could prove faulty, particularly if retaliation from countries targeted by Trump sparks a trade war (not to mention the possibility increased input costs cascade through the economy). During his Senate confirmation hearing, however, Miran said other parts of Trump’s agenda, including tax cuts, deregulation, and boosting energy production, will also help counteract inflationary pressures.

“American economic history has seen periods of high tariff rates coincide with extraordinary economic success,” he said.

However, other economic historians argue the Smoot-Hawley tariffs of 1930, for example, placed trade barriers around the world and exacerbated the Great Depression. As the U.S. attempts to overhaul a global system of trade developed over decades, the effects of a breakdown in trust between trading partners becomes harder to control, said Itay Goldstein, who chairs the finance department at the University of Pennsylvania's Wharton School.

“Everyone is going to have tariffs,” he said, “and then no one really benefits from it.”

Of course, that point might not resonate with many Trump voters who feel they lost out when the shift to a services-driven economy hollowed out America’s industrial base, noted David Teeters, a professor at IESE Business School.

“Free trade, like free lunches, does not exist,” Teeters, a former managing director in capital markets groups at both BNP Paribas and Barclays , wrote in a recent blog post. “Accepting lower potential growth may be a prudent trade-off for deliberate growth when facing fundamental changes to the global economy in coming years.”

Weak dollar heightens inflation risk

But slower growth coupled with rising prices, a phenomenon that reared its head in the 1970s, is clearly a worst-case scenario. Miran claimed the tariffs implemented on China during Trump’s first term illustrate how a repeat of “stagflation” can be avoided: “Inflation remained stable or even declined,” he wrote in his memo, “and GDP growth continued to perform quite well despite the Fed’s hiking cycle.”

Other academics, he acknowledged, have taken a much harsher view. A paper from Ohio State professors Daniel C.K. Chow and Ian M. Sheldon found the first batch of Trump tariffs on China cost American consumers $51 billion in increased prices, resulting in a net loss of $7.2 billion for the U.S. economy.

Regardless, Miran admitted that if a stronger dollar does not offset tax hikes on foreign goods, Americans will suffer higher prices and bear the cost of tariffs. It’s notable, therefore, that the U.S. dollar has fallen since Trump’s inauguration, said market commentator Luke Gromen, particularly as tariff talk has ramped up.

“If the dollar falls and we put the tariffs in, consumers are going to feel it,” said Gromen, who founded research firm Forest For The Trees. “It’s going to have to come out of consumers or out of corporate margins, because the dollar is not taking that blow.”

Gromen thinks the dollar’s recent decline is largely due to a memo signed by Trump last month that calls for greater scrutiny of Chinese investment in the United States. It was a move to scare capital out of U.S. markets, Gromen said, and Beijing obliged.

“That means the dollar is going to weaken, which means the inflation from your tariffs [is] going to hit you at least as much as us,” Gromen said of China’s response, “which is expressly against what Trump's trying to do.”

That speaks to a challenge Miran identified as essential for successfully implementing tariffs: preventing retaliation. As Harvey Schwartz, CEO of private equity giant Carlyle, explained last week, an economics textbook suggests one should look through a one-time price increase from tariffs. Trade wars, on the other hand, are “sustainably inflationary,” he said.

“Because the United States is a large source of consumer demand for the world with robust capital markets,” Miran wrote, “it can withstand tit-for-tat escalation more easily than other nations and is likelier to win a game of chicken.”

Gromen, however, noted China boasts more consumers than the U.S., buying more smartphones, seafood, and other types of goods. Politicians in Beijing, along with Canada and the European Union , appear more than willing to match Trump’s bluster, at least for now.

“I think the Trump administration thinks its hand is stronger than it is on some of this stuff,” Gromen said.

Ultimately, he thinks it’s still too early to tell whether tariffs will prove inflationary. But it’s safe to say, he added, that investors should expect plenty of volatility ahead.