Power, Policy, and the Dollar: Why the Mar-a-Lago Accord Could Backfire
Introduction: A Currency of Global Power
The United States dollar has been more than just the currency of a single nation; it has been the world’s financial anchor. For decades, countries have held the dollar in their central bank reserves, used it for international trade, and trusted in the stability of the American economy. This trust gave the United States several economic advantages, such as the ability to borrow cheaply and influence global financial systems. But what happens when the country issuing the world’s dominant currency decides to deliberately weaken it?
This question lies at the heart of former President Donald Trump’s proposed “Mar-a-Lago Accord,” a plan to devalue the U.S. dollar. The Mar-a-Lago Accord is a nickname for a proposed economic strategy by former U.S. President Donald Trump, aimed at weakening the U.S. dollar to help boost American exports and reduce trade deficits. It is named after Mar-a-Lago, Trump’s private resort in Florida, where such an agreement was imagined to be made — similar to how the historic Plaza Accord of 1985 was named after New York’s Plaza Hotel. The 1985 Plaza Accord, a successful international agreement to reduce the dollar’s value. However, unlike its cooperative predecessor, the Mar-a-Lago Accord adopts a much more aggressive and coercive tone. Through radical proposals, economic pressure, and geopolitical posturing, the plan aims to strengthen America’s trade position—but at what cost?
This essay explains why the Mar-a-Lago Accord is not only flawed in theory but dangerous in practice. By merging historical examples, economic principles, and political realities, it shows that trust, cooperation, and thoughtful policy—not threats and manipulation—are essential for safeguarding the dollar’s global role and America’s economic future.
The Plaza Accord: A Model of Cooperation
To understand the Mar-a-Lago Accord, we must first explore the Plaza Accord of 1985. At that time, the U.S. was facing a major trade imbalance. The dollar was overvalued, making American goods expensive overseas and imports cheaper in the U.S. This hurt American exporters and contributed to a growing trade deficit.
To fix this, the U.S. worked with four other major economies—France, Germany, Japan, and the United Kingdom—to agree on a plan. This international cooperation became known as the Plaza Accord. The goal was to bring down the value of the dollar gradually and in a controlled way. And it worked. The dollar fell in value, American exports became more competitive, and global markets remained stable.
The key ingredient in this success was cooperation. All five countries agreed on what needed to be done and adjusted their economic policies accordingly. No threats were made. No partners were bullied.
The Mar-a-Lago Accord: A Plan Built on Contradictions
In contrast to the Plaza Accord, Trump’s Mar-a-Lago Accord takes a very different path. Although it also seeks to weaken the dollar to improve America’s trade balance, it does so through unilateral and coercive methods. This includes forcing other countries to accept unfavourable terms and using economic threats like tariffs and taxes.
But the biggest flaw in Trump’s plan is the contradiction at its core: he wants the dollar to be weaker and stronger at the same time.
On the one hand, a weaker dollar would make U.S. exports cheaper and more attractive to foreign buyers. This could reduce the trade deficit and help American manufacturers. But on the other hand, the dollar’s global dominance relies on trust in its strength and stability. If countries around the world believe that the U.S. is purposely devaluing the dollar, they may start to lose confidence in it.
This would mean that central banks around the world might sell their U.S. Treasury bonds—the debt issued by the American government. If demand for these bonds falls, their prices drop and interest rates rise. That would make borrowing more expensive for the U.S. government, businesses, and ordinary people. In trying to help exports, the policy could actually hurt the economy in other ways.
Radical Proposals That Miss the Mark
The Mar-a-Lago Accord is filled with ideas that may sound bold but are economically unrealistic. Let’s examine a few of them.
- 100-Year Zero-Coupon Bonds
Stephen Miran, Trump’s economic adviser, has suggested replacing traditional U.S. Treasury bills with 100-year bonds that pay no interest until they mature—a whole century later. The idea is that this would force foreign central banks to accept worse terms for holding American debt. But this plan is full of holes. Central banks prefer to hold short-term, safe, and liquid assets—things they can easily turn into cash if needed. A 100-year bond with no regular payments is none of these. Why would any country agree to hold such a bond, especially when other currencies and investments are available? In fact, forcing foreign central banks to accept these bonds could drive them away from U.S. debt altogether. That would increase America’s borrowing costs and reduce trust in the dollar—exactly the opposite of what the plan intends.
- User Fees and Investment Taxes
Another idea floated by Miran is to charge foreign central banks and investors a fee for holding U.S. debt or investing in the U.S. economy. But penalising investors usually has one simple result: they take their money elsewhere. Such measures could scare off much-needed foreign capital. Countries might reduce their investments in U.S. stocks, bonds, and real estate. This again would raise interest rates and lower the value of U.S. assets. In trying to appear tough, the plan could end up weakening the economy.
- A Sovereign Wealth Fund Built on Debt
Trump has also proposed creating a sovereign wealth fund (SWF) for the U.S.—a fund where a government saves and invests money for the future. Many countries have such funds, including oil-rich Norway and trade-surplus nations like Singapore and China. They use extra income from natural resources or exports to build wealth for the long term. But the U.S. does not have those surpluses. It has deficits. Creating a SWF by borrowing money—especially to invest in domestic projects rather than foreign assets—defeats the purpose. Instead of saving, it would increase the national debt. It’s like taking out a loan to start a savings account—it just doesn’t make sense.
Coercion vs Cooperation: The Dangers of Economic Bullying
One of the most troubling aspects of the Mar-a-Lago Accord is its reliance on coercion. Trump has often used tariffs—taxes on imports—as a weapon in trade disputes. He has also threatened allies and adversaries alike to force them into agreements. This approach might win short-term political points, but it rarely builds lasting partnerships. In fact, it has the opposite effect. Countries are starting to find ways to avoid the dollar. China, Russia, and even the European Union are exploring alternatives like central bank digital currencies (CBDCs) or increasing trade in their own currencies. Trump’s aggressive style has eroded trust in American leadership. Unlike the Plaza Accord, which built confidence through cooperation, the Mar-a-Lago Accord threatens to push the world away from the dollar.
The Bigger Picture: What’s at Stake?
If the world begins to turn away from the dollar, the consequences for the United States could be severe.
- Higher Borrowing Costs: As fewer countries hold U.S. Treasury bonds, the U.S. will need to offer higher interest rates to attract buyers. This increases the cost of debt for the government, businesses, and consumers.
- Less Global Influence: The U.S. has used the dollar to shape global economic rules. Losing this power could reduce its influence in international institutions like the International Monetary Fund (IMF) or World Bank.
- Economic Instability: A loss of confidence in the dollar could trigger financial market volatility, reduce investment in the U.S., and harm global economic stability.
- Reduced Ability to Manage Crises: In times of crisis, countries often turn to the dollar as a safe haven. If that changes, the world could face greater uncertainty during global emergencies.
A Better Way Forward: Cooperation and Common Sense
So what should the U.S. do if it wants to fix its trade imbalances and strengthen the economy?
Instead of bullying other countries, it should work with them. That means encouraging surplus countries like Germany or China to increase their domestic spending, which would reduce global imbalances. At the same time, the U.S. can reduce its budget deficit through better financial management, rather than trying to manipulate its currency.
Maintaining confidence in the dollar requires more than strong words and tariffs—it requires responsible policies, mutual respect, and international cooperation.
Conclusion
The Mar-a-Lago Accord may have a catchy name, but its ideas are built on shaky ground. By trying to force the dollar down while keeping its status high, the Trump administration is chasing two conflicting goals. Its radical proposals, from bizarre bonds to economic punishment of investors, show a misunderstanding of how global finance really works.
History has shown that cooperation leads to stability, while coercion breeds uncertainty. If the U.S. wants to preserve the dollar’s global role and protect its own economic future, it must choose diplomacy, not domination; sound policy, not political theatre. For a nation whose currency is the world’s most trusted, the path forward must be paved with wisdom—not whim.
