Dollar weakening: Trump plans economic turnaround – what does that mean for us?

Dollar weakening: Trump plans economic turnaround – what does that mean for us?

The US dollar remains under pressure and could be part of a comprehensive economic plan by President Donald Trump to strengthen the competitiveness of the US economy. Loud Mercury The most important key figure is heading for its fifth consecutive month of losses, which would represent the longest losing streak since 2017. The dollar has appreciated significantly in recent years, rising by around 40% compared to major currencies since the 2008 financial crisis. However, this has also made imports cheaper and exports more expensive, resulting in a trade deficit of over $1 trillion annually.

The announced tariff break for Europe and other countries is coming to an end, but China still has some time before measures are expected there too. Despite these developments, there are no fundamental improvements in trade relations between the United States and the European Union. Economist David Meier of Julius Baer points out that the tight fiscal situation and high US external debt, combined with Trump's tariff policies, have worsened sentiment for US assets.

The Mar-a-Lago Accord

A central component of Trump's economic approach is the so-called Mar-a-Lago Accord. This proposed strategy aims to address the overvaluation of the dollar to strengthen American manufacturing and reduce the trade deficit. Business News reports that the plan is inspired by the 1985 Plaza Accord, in which major economies worked together to deliberately devalue the dollar.

The Mar-a-Lago plan could make U.S. exports more competitive. An important part of the plan is also the requirement for key trading partners such as China to appreciate their currencies against the dollar. However, such a measure could cause economic instability and provoke retaliation from other countries.

Challenges and risks

Implementing the Mar-a-Lago Accord faces enormous challenges. These include the complexity of global coordination and the different economic interests of the partner countries. Critics warn that unilateral action to devalue the dollar could be not only unrealistic but also fraught with unintended consequences such as inflation and disruption to global financial markets.

Although the Mar-a-Lago Accord is currently a theoretical proposal with no formal implementation, the international response to the plan remains uncertain. The financial and political implications of this planned regime change in the US dollar could significantly reduce US international influence and benefit countries such as China and Russia.

In conclusion, the weakness of the dollar and the proposed economic changes under the Trump presidency could have far-reaching effects on the US economy and global trade relations.