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Mar-a-Lago Accord

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The Mar-a-Lago Accord is a proposed economic and trade initiative of the Donald Trump Administration during his second term. Named after Trump's Mar-a-Lago estate in Florida, the Accord is a blueprint for restructuring global trade and monetary relations. Its core goal is to devalue the dollar while preserving its role as the world reserve currency, a careful balancing act intended to avoid the contradictions described in the Triffin paradox. The plan seeks to reduce the United States trade deficit, restore domestic manufacturing, and realign international economic relationships. It proposes to achieve these aims through the use of tariffs, currency and capital measures, and trade agreements tied to national security. Drawing inspiration from the 1944 Bretton Woods Agreement and the 1985 Plaza Accord, the Mar a Lago Accord envisions a similarly large scale realignment of global trade and currency systems.

As of early 2025, the Mar-a-Lago Accord has not been implemented and remains in the earliest stages of negotiation. Its success is highly uncertain, and many of its provisions are deliberately kept confidential to avoid disrupting delicate international talks. Public insight into the Accord is limited and primarily based on the work and public statements of Stephen Miran, chair of the Council of Economic Advisers, and Scott Bessent, Secretary of the Treasury. Miran’s report, A User's Guide to Restructuring the Global Trading System, outlines many of the core ideas and principles believed to underpin the proposal.

Background

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Postwar order and the rise of the dollar

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Distribution of global reserve currencies

Following World War II, the global economic order was reshaped under American leadership through the Bretton Woods system, which established fixed exchange rates, with the U.S. dollar convertible to gold, and created international institutions such as the International Monetary Fund (IMF) and World Bank to stabilize the global financial system. The U.S. dollar emerged as the world's primary reserve currency, largely due to America's economic dominance, vast gold reserves, and role as a guarantor of global security.[1][2][3]

Globalization and its tradeoffs

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This arrangement served both economic and geopolitical purposes. Economically, the dollar's role as a stable unit of account facilitated global trade and positioned U.S. financial assets as the safest and most liquid in the world. Its reserve status allowed the U.S. to borrow cheaply, import goods at a lower cost, and sustain consumption-driven growth. American companies benefited from easier access to capital and expanded global reach.

Geopolitically, the dollar underpinned a U.S.-led security architecture designed to contain communism during the Cold War and project power during the war on terror. In exchange for military protection and access to U.S. markets, allies in Europe and Asia aligned with American interests. Dollar dominance further enhanced U.S. leverage, enabling Washington to enforce sanctions, influence international behavior, and maintain leadership in global commerce and security.

Bethlehem Steel in Bethlehem, Pennsylvania, one of the world's leading steel manufacturers for most of the 20th century, discontinued most of its operations in 1982, declared bankruptcy in 2001, and was dissolved in 2003.

However, this system had long-term tradeoffs. The global demand for dollars required the U.S. to run persistent trade and currency deficits. Over time, this contributed to the offshoring of industrial production, as a strong dollar made U.S. exports expensive and foreign imports cheaper. While this benefited consumers through lower prices, it also undermined domestic manufacturing and led to job losses in industrial sectors. Critics argue that the system effectively prioritized global financial stability and consumption over national industrial capacity.[4][5]

The rise of low-cost labor economies, especially China after its 2001 accession to the World Trade Organization (WTO), further intensified this dynamic. American companies increasingly shifted production overseas to take advantage of lower wages and looser regulations, often with encouragement from policymakers who believed that trade would liberalize authoritarian regimes. Instead, China became the world's manufacturing hub while entrenching its state-led authoritarian model, leading to supply chain vulnerabilities, intellectual property theft, and strategic dependency.[6][7]

In the 2020s, a series of shocks, including the COVID 19 pandemic, the 2021 Suez Canal blockage, and Russia’s 2022 invasion of Ukraine exposed critical supply chain vulnerabilities. These disruptions underscored the risks of overreliance on just-in-time systems and single-source suppliers, leading to cascading shortages in goods like semiconductors and pharmaceuticals. The resulting supply shocks contributed to a surge in inflation not seen since the 1970s, forcing even longtime defenders of globalization to reevaluate the tradeoffs.[8][9]

Rise of economic nationalism

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When the Cold War ended with the collapse of the Soviet Union in 1991, American policymakers believed history had effectively concluded with a decisive victory for liberal democracy. Presidents George H. W. Bush and Bill Clinton aimed to build a global order based on liberal democratic principles, open markets, and international rules managed by established institutions. However, this optimistic vision faced unexpected setbacks. The attacks on September 11, 2001 shifted America's focus dramatically toward the War on Terror, leading to military interventions and costly engagements abroad. Overreach in these efforts gradually eroded both domestic and global trust in American leadership. At the same time, the rise of authoritarian powers, particularly Russia and China, undermined hopes that the world would inevitably align with the liberal, rules based system envisioned in the 1990s.[7]

Distracted by these challenges, American policymakers failed to respond adequately to critical domestic vulnerabilities, including persistent trade deficits, industrial decline, currency imbalances, and growing reliance on vulnerable and foreign-controlled supply chains. By the 2010s, this neglect fueled widespread frustration, giving rise to political movements like the Tea Party and the emergence of Donald Trump, who rejected the post-Cold War global consensus. Simultaneously, the political left increasingly drew attention to inequality and argued that policymakers had failed to address the damage globalization inflicted upon American workers and communities.[10][7]

President Donald Trump implementing tariffs on steel and aluminum imports during his first term.

This rising discontent set the stage for significant policy shifts. During Donald Trump's presidency, economic nationalism returned to the forefront of American policy, marked by high profile trade actions such as sweeping tariffs on Chinese goods, steel and aluminum imports, and a renegotiation of key trade agreements like NAFTA. These moves broke from decades of bipartisan support for globalization and signaled a shift toward using tariffs as a tool of economic and geopolitical leverage.

President Joe Biden touring the construction of a semiconductor manufacturing facility largely funded and expedited by the CHIPS & Science Act.

Under President Joe Biden, elements of this economic nationalism gained bipartisan acceptance. His administration enacted major industrial policy legislation including the IIJA, CHIPS Act, and IRA, which together drove the largest wave of investment in American infrastructure, manufacturing, and energy in over four decades. Biden also expanded federal "Buy American" rules, prioritized domestic supply chain resilience, and imposed industry-specific tariffs in sectors such as steel, aluminum, solar panels, and critical minerals to protect emerging domestic industries.[11][12]

While the challenges posed by globalization became widely acknowledged across the political spectrum, the proposed solutions diverged. Republicans prioritized broad supply-side protectionism, using tools like blanket tariffs, trade enforcement, and economic decoupling to restrict imports and revive domestic industry. Democrats took a more targeted approach, combining demand-side tools like subsidies and public investment with selective supply-side measures to strengthen key sectors while maintaining stable trade relationships.[11][12][13]

The dollar dilemma

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At the core of the ongoing debate is a structural challenge: the U.S. reserve currency role provides financial and geopolitical advantages but also tends to keep the dollar overvalued, encouraging deficits and hollowing out domestic manufacturing. This tradeoff between global monetary dominance and domestic industrial health has proven difficult to reconcile. The Mar-a-Lago Accord, introduced during Trump's second term, reflects a new strategy: that the United States can, through assertive, risky economic policy, retain reserve currency status while reindustrializing and rebalancing global trade on American terms.[14][15]

The Accord

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The Mar-a-Lago Accord is the framework guiding the Trump administration's second term trade and currency agenda. Developed by key advisers Stephen Miran and Scott Bessent, the accord aims to reduce U.S. trade deficits by addressing what it views as structural imbalances in the global economy, particularly the overvaluation of the dollar. It combines broad tariffs, potential currency interventions, and a rethinking of international economic relationships, including proposals to link trade access with national security cooperation.

Stephen Miran

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Stephen Miran, chair of the Council of Economic Advisers and author of A User's Guide to Restructuring the Global Trading System, is a central figure behind the Mar-a-Lago Accord and a leading advocate for transforming the global economic framework. He argues that the core imbalance in international trade stems from the consistent overvaluation of the U.S. dollar, driven by foreign demand for dollar-denominated reserve assets such as Treasury bonds. This overvaluation, he claims, suppresses exports, encourages imports, and has severely weakened the United States manufacturing base.[16][15]

Miran outlines a strategy built on several key principles:

  • Tariffs as strategic tools. He supports tariffs not only to protect domestic industry but also to raise revenue, shift burdens onto foreign producers, and serve as leverage in international negotiations.
  • Currency offset theory. He argues that tariffs do not necessarily lead to inflation at home if the dollar strengthens in response. A stronger dollar can reduce the price of imported goods, offsetting the cost of tariffs, and lowering the real income of foreign exporters.
  • A new international currency agreement. Miran proposes a modern equivalent of the 1985 Plaza Accord, which he refers to as the Mar-a-Lago Accord. The goal would be coordinated currency appreciation among U.S. trading partners to address the dollar's overvaluation.
  • Unilateral options if diplomacy fails. If a multilateral agreement is not possible, Miran advocates for using legal and financial tools such as capital restrictions, targeted taxes, or financial regulation under existing laws like the International Emergency Economic Powers Act.
  • Burden sharing within the reserve currency system. Miran reframes the traditional Triffin dilemma, arguing that while the world relies on the United States to supply dollar reserves, the costs of doing so have fallen disproportionately on U.S. industry. His framework calls for redistributing those costs through strategic trade and monetary policy.
  • Trade and security alignment. Miran supports linking economic partnerships to defense cooperation. He argues that countries benefiting from U.S. security guarantees should align their economic practices with American strategic interests.
  • Industrial revival and deregulation. A key part of his strategy is to rebuild industrial strength in sectors critical to national power, including energy, defense, semiconductors, and advanced manufacturing. He also calls for regulatory reform to help domestic firms compete more effectively in a strong dollar environment.

Scott Bessent

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Official portrait of Treasury Secretary Scott Bessent

Scott Bessent, Treasury Secretary under Donald Trump and founder of Key Square Group, focuses on integrating trade and security policy to address what he sees as structural imbalances in the global economy. He argues that globalization has failed to deliver on its promises and that the United States must take a more active role in reshaping the international economic order.[17][18]

Bessent supports:

  • Linking trade access to security cooperation, where allies commit to defense spending and economic reforms in exchange for access to the U.S. market
  • Broad tariffs applied at the macro level, to correct global imbalances caused by foreign industrial policy and suppressed consumption
  • A segmented global economy, where countries closer to U.S. strategic interests receive more favorable economic treatment
  • Reducing U.S. budget deficits, to lessen the domestic contribution to global imbalances
  • Long-term negotiation and forward guidance, to manage market expectations and strengthen U.S. leverage

Donald Trump

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Donald Trump has consistently framed international economic policy as a matter of negotiation and leverage. Throughout his presidency, Trump approached trade with a transactional mindset, prioritizing perceived short-term gains over ideological consistency. Trump views tariffs, market access, and military commitments as bargaining chips in a broader effort to secure better deals for the United States.[13]

The Mar-a-Lago Accord reflects this approach. Rather than relying on multilateral rules or long-standing agreements, Trump favors case-by-case arrangements where the terms are flexible and contingent on a country's behavior. His view is that allies should contribute more to their own defense and open their markets in return for access to the U.S. economy. In adversarial cases, he believes the threat of tariffs or financial restrictions can bring foreign governments to the negotiating table.

Trump has described past trade agreements as poorly negotiated and has positioned himself as the one who can fix them by applying pressure and demanding reciprocity.[19] The Accord is consistent with this worldview, emphasizing leverage, unpredictability, and the possibility of better terms through confrontation followed by compromise.

Criticisms and concerns

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The Mar-a-Lago Accord has faced significant opposition from economists, foreign officials, and analysts who argue that attempts could destabilize global trade, strain alliances, and backfire on the U.S. economy.

Doubt over currency strategy

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A central part of the Accord is persuading other countries to raise their currency values relative to the dollar, similar to what Former President Ronald Reagan accomplished with the 1985 Plaza Accord. This would make United States exports more competitive without directly devaluing the dollar or triggering inflation. In theory, it could reduce reliance on foreign capital while reviving domestic industry.

Critics argue that the failure of this strategy lies not in the idea itself, but in the execution. The Plaza Accord succeeded because it was built on trust, credibility, and shared strategic purpose. In contrast, the Trump administration has undermined the diplomatic and institutional relationships needed to coordinate a global monetary realignment.

In early 2025, the administration suspended military aid to Ukraine,[20] and suggested that NATO members who do not meet his defense spending targets might not receive United States protection.[21] He also made provocative comments about redrawing international borders, would not rule out the use of military force to take Greenland,[22] and suggested that Canada "should become the 51st state."[23] World leaders view these statements as dismissive of national sovereignty and destabilizing to the postwar international order.

Rather than drawing countries into a new consensus, Trump’s approach has pushed them to seek alternatives. Japan, South Korea, and China have increased coordination on trade and currency policy to shield themselves from potential United States tariffs and financial pressure.[24][25] In Europe, the European Union has backed away from earlier efforts to distance itself from China, shifting instead toward using Beijing as a counterweight to an increasingly unpredictable United States.[26]

Doubts over Trump's deal making ability

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Some critics question whether Trump has the diplomatic capacity to deliver the kind of coordination the Accord requires. They point to past negotiations that either failed outright or contributed to long-term instability:

  • Iran Nuclear Deal: In 2018, Trump withdrew from the Joint Comprehensive Plan of Action, promising a stronger deal. No replacement was reached, and Iran expanded its nuclear program. Critics also argue that by abandoning the deal unilaterally, the U.S. lost key bargaining leverage to pressure Iran into curbing its support for groups like Hezbollah, the Houthis, and other regional proxies.[27]
  • North Korea Summits: Trump's meetings with Kim Jong-un included the 2018 Singapore summit, the 2019 Hanoi summit, and a historic encounter at the Korean Demilitarized Zone. Despite these breakthroughs in optics, no binding agreement was reached. Talks collapsed over sanctions and disarmament disputes, and North Korea resumed missile testing shortly after.[28]
  • Afghanistan Withdrawal Agreement: In 2020, Trump signed a deal with the Taliban that excluded the Afghan government. The agreement accelerated the collapse of Afghan institutions, and Kabul fell within days of the final U.S. withdrawal in 2021.[29]
  • Abraham Accords: The 2020 agreements normalized ties between Israel and several Arab states but ignored the Palestinian issue. Critics argue this failure undermined prospects for a lasting peace and helped fuel the desperation that contributed to the 2023 Hamas attack and the broader war that followed.[30][31] This pattern of neglecting the weaker party was evident in Trump's deal with the Taliban, which bypassed the Afghan government, and continues in his approach to Ukraine peace talks. Critics argue that his impulsiveness and lack of mental resilience hinder his ability to navigate complex geopolitical systems.
  • USMCA breakdown: Trump signed the USMCA as a replacement for NAFTA, framing it as a major achievement. But in 2025, he imposed unilateral tariffs on Canadian and Mexican imports, citing immigration and drug enforcement issues. Legal analysts and foreign officials said the move violated the agreement, reinforcing concerns that deals made under Trump lack durability and may be reversed or disregarded at will.

Overreliance on market centered policy

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Critics argue that the Mar-a-Lago Accord leans too heavily on market centered policy tools such as tariffs, deregulation, trickle-down economics, and currency actions, while overlooking the role of public investment and domestic demand in rebuilding industrial capacity. Many economists see this as a repetition of past strategies that failed to deliver lasting results for American manufacturing.[32]

During the Reagan administration, tax cuts and deregulation were used to stimulate production under the theory of trickle-down economics. However, manufacturing employment continued to decline, and corporate profits were often directed toward stock buybacks rather than new factory investment. The 1985 Plaza Accord helped weaken the dollar to support exports, but without public investment or workforce programs, the long-term effects on industrial capacity were limited.[33]

A more recent example comes from the United Kingdom after Brexit. In 2022, Prime Minister Liz Truss introduced a plan centered on tax cuts and deregulation with no matching investment in skills, infrastructure, or innovation. Markets reacted with panic, the pound fell, and the plan collapsed within weeks. British manufacturing has continued to struggle, showing that supply side tools alone often fall short.[34]

Economists argue that tariffs and a weaker dollar do not guarantee factory growth without strong domestic demand, workforce training, or public support. Deregulation may reduce costs, but it cannot solve supply chain gaps, labor shortages, or regional decline.[35]

Durable industrial growth has consistently depended on more than just trickle-down economics or currency shifts. Countries like Germany, Japan, South Korea, and Taiwan have used public investment, export discipline, and long-term planning to build strong manufacturing sectors within broadly market driven economies. These governments did not rely on market signals alone; they supported industry through public investment in energy, infrastructure, education, and technology. Their success reflects a shared principle: industry does not thrive on cost reduction alone. It requires public commitments to long term capacity and strategic investment.

President Biden has advanced the clearest American example of this approach so far. His administration has actively used trade tools including tariffs, domestic content rules, and procurement standards alongside large public investment to rebuild domestic production. The CHIPS Act, Inflation Reduction Act, and Bipartisan Infrastructure Law channel federal resources into semiconductor fabrication, energy and grid modernization, transportation networks, and workforce development. This policy mix has helped drive a manufacturing construction surge not seen since World War II. Economists increasingly see it as evidence that reviving industry requires a combination of trade strategy and sustained public investment. Without this foundation, critics argue, the Mar-a-Lago Accord risks not only failing to revive industry but actively derailing the manufacturing construction surge now underway.[36]

See also

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References

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  2. ^ "Bretton Woods Agreement". Corporate Finance Institute. Retrieved 2025-04-05.
  3. ^ "The Dollar: The World's Reserve Currency | Council on Foreign Relations". www.cfr.org. Retrieved 2025-04-05.
  4. ^ Taft, Chloe E. (2018-06-25), "Deindustrialization and the Postindustrial City, 1950–Present", Oxford Research Encyclopedia of American History, doi:10.1093/acrefore/9780199329175.013.574, ISBN 978-0-19-932917-5, retrieved 2025-04-05
  5. ^ "The changing role of the US dollar". Brookings. Retrieved 2025-04-05.
  6. ^ "China Trade, Outsourcing and Jobs: Growing U.S. trade deficit with China cost 3.2 million jobs between 2001 and 2013, with job losses in every state". Economic Policy Institute. Retrieved 2025-04-05.
  7. ^ a b c "Truth and consequences of offshoring: Recent studies overstate the benefits and ignore the costs to". Economic Policy Institute. Retrieved 2025-04-05.
  8. ^ Cuba-Borda, Pablo; Queralto, Albert; Reyes-Heroles, Ricardo; Scaramucci, Mikäel (2025-02-28). "How Do Trade Disruptions Affect Inflation?". {{cite journal}}: Cite journal requires |journal= (help)
  9. ^ "How Supply Chain Disruptions Contributed to Inflation in 2021". www.stlouisfed.org. Retrieved 2025-04-07.
  10. ^ "Tea Party movement | Definition, Significance, Summary, Beliefs, & Facts | Britannica". www.britannica.com. 2025-03-14. Retrieved 2025-04-05.
  11. ^ a b "Top Manufacturing Stories of 2023: The Year Factory Construction Really Came Back". Alliance for American Manufacturing. 2023-12-27. Retrieved 2025-04-06.
  12. ^ a b jonjacob. "Exploring the rebirth of American manufacturing". BlackRock. Retrieved 2025-04-06.
  13. ^ a b Nelson, David (December 20, 2024). "Trump Trade 2.0".
  14. ^ "The US's dilemma: Dollar dominance or re-industrialisation". ThinkChina - Big reads, Opinion & Columns on China. Retrieved 2025-04-06.
  15. ^ a b A User’s Guide to Restructuring the Global Trading System, Stephen Miran (November 2024).
  16. ^ Sutton, Sam (2025-01-06). "Why Stephen Miran thinks tariffs can work". POLITICO. Retrieved 2025-04-05.
  17. ^ The Economic Club of New York (2025-03-11). The Honorable Scott Bessent, United States Secretary of the Treasury. Retrieved 2025-04-05 – via YouTube.
  18. ^ "A Trump adviser on how the international economic system should change". The Economist. ISSN 0013-0613. Retrieved 2025-04-05.
  19. ^ Severns, Maggie (2016-09-26). "Trump pins NAFTA, 'worst trade deal ever,' on Clinton". POLITICO. Retrieved 2025-04-06.
  20. ^ Samuels, Brett (2025-03-03). "Trump pauses aid to Ukraine amid clash with Zelensky". The Hill. Archived from the original on 2025-03-28. Retrieved 2025-04-07.
  21. ^ Samuels, Brett (March 6, 2025). "Trump raises doubts about NATO's mutual defense pact". The Hill.
  22. ^ Press, The Associated (2025-03-30). "Trump won't rule out military force to take Greenland". NPR. Retrieved 2025-04-06.
  23. ^ "Trump keeps talking about making Canada the 51st state. Is he serious?". ABC News. Retrieved 2025-04-06.
  24. ^ "South Korea, China, Japan agree to promote regional trade as Trump tariffs loom". CNBC. 2025-03-30. Retrieved 2025-04-05.
  25. ^ "China, Japan, South Korea agree to counter US tariffs, eye stronger trade ties". Firstpost. 2025-03-31. Retrieved 2025-04-05.
  26. ^ "Trump is pushing Europe and China closer together. Europe should tread carefully | Chatham House – International Affairs Think Tank". www.chathamhouse.org. 2025-02-27. Retrieved 2025-04-08.
  27. ^ "Killing the Iran nuclear deal was one of Trump's biggest failures | Responsible Statecraft". responsiblestatecraft.org. Retrieved 2025-04-06.
  28. ^ Woodward, Bob (September 11, 2018). Fear: Trump in the White House (2nd ed.). Simon & Schuster. ISBN 978-1501175510.
  29. ^ "US general says Afghanistan collapse rooted in Trump-Taliban deal". Al Jazeera. Retrieved 2025-04-06.
  30. ^ Elgindy, Khaled (2025-01-22). "The Fallacy of the Abraham Accords: Why Normalization Without Palestinians Won't Bring Stability to the Middle East". www.foreignaffairs.com. Retrieved 2025-04-06.
  31. ^ "Forget 'peace,' did Abraham Accords set stage for Israel-Gaza conflict? | Responsible Statecraft". responsiblestatecraft.org. Retrieved 2025-04-06.
  32. ^ "5 Reasons Why Supply-Side Economics Does Not Work". Investopedia. Retrieved 2025-04-11.
  33. ^ "Would Reaganomics Work Today?". The Balance. Retrieved 2025-04-11.
  34. ^ Winkler, Matthew (March 19, 2024). "Brexit's Lasting Damage Is Looking Inescapable". Bloomberg News.
  35. ^ "5 Reasons Why Supply-Side Economics Does Not Work". Investopedia. Retrieved 2025-04-11.
  36. ^ Burns, Tobias (June 13, 2023). "How Biden's big investments spurred a factory boom". The Hill.
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