What does the 'Mar A Lago' agreement mean for the dollar?

President Donald Trump’s daring plan to reform the method of the United States dealing with the rest of the world has speculations on the possibility of reaching a multilateral agreement aimed at deliberately weakening the dollar to help US exporters to compete with other peers in countries such as China and Japan. Trump did not declare an international agreement that deliberately weakened the dollar, but that did not prevent speculation in “Wall Street”. Analysts have already decided on the name ‘Mar-a-Lago’ agreement, following Trump’s private club in Palm Beach, Florida. Much attention focuses on a research article written by Stephen Miran, Trump’s candidate for the head of the Economic House of Economic House, published in November 2024 when he was published the main strategy in the Hudson Bay Capital hedge. In this article, Miran suggested possible political options to reform the global trading system and address the economic imbalances caused by ‘continuous exaggeration in the dollar review’. Miran is not the only one in the Trump circle that thinks so. Before selecting a Cabinet minister, Scott Besent expected a ‘kind of major economic restructuring’ in the coming years. What can the ‘Mar A Lago Agreement’ want to achieve? The most important concept is as follows: Trump’s promise to implement the golden age includes the creation of a Renaissance in American manufacturing and exports. It has also long expressed its concern about the size of the US trade deficit, which set a record of $ 1.2 trillion in 2024, which describes it as a transfer of wealth abroad. The problem is that the dollar exchange rate was historically strong, which weakened US competitiveness by making imports relatively cheaper. In fact, some analysts believe that the dollar has run into its value today, based on economic models that take into account factors such as the local purchasing power of the currency. The evaluation, and the resulting consequences, would give Washington a motive to reach some kind of agreement with other countries to address the strength of the currency. Has similar agreements ever reached? Yes, of course, in 1985, a group of governments agreed on the ‘Plaza Agreement’, which is mentioned the name of the hotel in which New York officials comply, under similar conditions that include high inflation, high interest rates and dollars. An agreement was reached between the United States, France, Japan, the United Kingdom and (then) West Germany to weaken the dollar against its currencies. The agreement was reached on the basis that the significant increase in the dollar is harmful to the global economy. The increase in the dollar was then driven by the strict monetary policy followed by the Federal Reserve chairman, Paul Volker, to reduce inflation, as well as the fiscal policy of the expansion accepted by President Ronald Reagan, which includes the reduction of taxes and increasing expenses. At the time, Japan saw a breakthrough in its exports, which raised concerns from American lawmakers who began to accept protectionist policies, just like China today. Despite the success of the agreement to reduce the value of the dollar, it was later blamed that the value of the yen was also improved. In 1987, the ‘Louvre Agreement’ was reached after the ‘Plaza Agreement’, in an attempt to combat the dollar drop and calm the yen profits. In Japan, the agreements were blamed for playing a role in redeeming the country in the 1990s to release the economic – the period known as the ‘lost contract’ – a lesson that China will not overlook while facing the pressure of shrinkage, real estate crisis and the evacuation of the offer in the industrial sector. How can the agreement pass “Mar A Lago”? The traditional approach includes the promise of commercial partners of the United States to increase the local consumption of commodities they deliver, and reduce the dependence on their manufacturing companies on export to the United States. This approach may also include agreements to interfere in the foreign exchange market to push currencies strongly in the desired direction, but the large scope of daily trading in the market – and an amount of $ 7.5 according to the latest statistics – it would make it an important challenge. (If the value of importing a state exceeds its export) is the other side of the clear capital flow (when the money flow to the state is greater than the flow out there). This leads to the continuous increase in the value of the green currency, which weighs the manufacturing sector in the United States. Therefore, any international agreement should be limited to these factors that lead to a high value of the dollar. How will American religion affect any possible economic agreement? Some speculation has recently focused on the idea of ​​the US Treasury issue of useless government bonds, known as a connection to zero distributions, and it is worth 100 years. In his article published during November, Miran was tortured with a proposal in a research article written by Zoltan Bouzar, a former credit -Swiss analyst and founder of the research company X Uno Plores, during June, on an agreement between the United States and its military partners, where the allies must buy the connection after 100 years in exchange for US security. Others presented the idea of ​​exchanging Treasury Ministery some current foreign possessions from the US government’s debt with long -term tires with zero vouchers. Safety guarantees can be withdrawn from the Allies who refuse to participate, or impose the definitions of the customs on them or both. What are the consequences of restructuring US debt in this way? The idea is that it can help lower interest rates and financial deficit in the United States, which weaken the dollar. But such a radical idea can also pose the risk of a trust in the US Treasury market, which is worth $ 29 trillion. In fact, the slogan of the federal government, which he has long announced to the issuance of debt, is ‘regular and predictable’. Press the Allieds to do debt for 100 years or to buy bonds to cause unexpected damage to the Treasury’s reputation. One of the main reasons these securities have made a global standard for a long time is that it is considered very fluid, or in other words easy to trade, and that they are subject to the global recognized law, which increases confidence in it. Therefore, the possibility that the current situation is radically changing makes it difficult for many people to represent the ‘Mar a Lago’ agreement includes debt exchanges. However, did Trump defend the strong dollar? Trump and his economic team said the United States is still committed to maintaining the strong dollar, threatening to impose the definitions of customs on emerging market economies that seek to move away from the dollar’s use to settle commercial transactions. After a policy that combines the maintenance of the strength of the dollar as a basic currency in the global economy and the pursuit of the weakening, you must achieve an accurate balance between different economic interests, which is a major challenge. What are the risks of the dollar weakness in the US economy? The weakness of the dollar would increase the cost of imports, and this could lead to high inflation rates. It can also lead to the removal of investors chasing US assets thanks to their high returns and status as a safe haven, which can lead to the conversion of some of these flow to competitors such as the euro or the yen.