A ‘Mar-a-Lago Accord’; like Plaza Accord, followed by Louvre Accord
A grand multinational bargain that would deliberately weaken the dollar — helping American exporters compete with rivals such as China and Japan.
Analysts have already settled on a name, the “Mar-a-Lago Accord,” after Trump’s private club in Palm Beach, Florida.
Much of the attention has focused on a paper by Stephen Miran, Trump’s nominee to lead the White House Council of Economic Advisers.
In it, Miran laid out a road map for reforming the global trading system and fixing economic imbalances driven by “persistent dollar overvaluation.”
Before being picked as Treasury secretary, Scott Bessent predicted in June that there would be “some kind of grand economic reordering” in the coming years.
Trump has promised to deliver a golden age that will include a renaissance for American manufacturing and exports.
He also has longstanding concerns about the size of the US trade deficit, which hit a record $1.2 trillion in 2024, caracterizing it as effectively a transfer of wealth abroad.
Have similar accords ever been agreed?
Yes. In 1985, a group of governments agreed the Plaza Accord — named after the New York hotel where officials met — against a similar backdrop: high inflation, high interest rates and a strong dollar.
A deal was reached between the US and France, Japan, the UK and (then) West Germany to weaken the dollar against their currencies.
The surge in the dollar had been spurred by the tighter monetary policy of Federal Reserve Chair Paul Volcker to bring down inflation, as well as President Ronald Reagan’s expansionary fiscal policy with tax cuts and increased spending.
Plaza was followed in 1987 by the Louvre Accord, which attempted to draw a line under the dollar’s decline and cool the yen’s gains.
In Japan, the agreements were blamed for playing a role in the nation’s descent into economic stagnation in the 1990s — a period known as the “Lost Decade”
— a lesson that won’t be lost on China as it grapples with its own deflationary pressures, a real estate crisis and manufacturing overcapacity.
What are the possible risks of a weaker dollar for the US economy?
A weaker dollar would drive up the cost of imports and could send inflation higher as a result.
It could also scare off investors who flock to US assets for their higher yield and safe-haven status.
Bloomberg 25 February 2025
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