The procedure of US President Donald Trump with ever new tariffs ensures uncertainty on the financial markets. Experts suspect that he wants to create chaos in order to weaken the US dollar and enforce its economic policy goals. Is a recession part of his larger plan?
• Experts: Trump wants weaker US dollars
• Mar-a-Lago-Accord should move creditor to exchange bonds
• Consciousness of success uncertain
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According to experts, the current strength of the US dollar compared to many other large currencies is a central problem in the US economy. “The US dollar is currently undergoing a phase of general overvaluation” and is “unusually strong with the exception of the Swiss Franconia and the Icelandic crown -“, Professor Werner Antweiler from the Sauder School of Business at the University of British Columbia told “Marketwatch”. “This means that US exports are relatively more expensive compared to elsewhere, and it also means that US imports are particularly cheap,” continued the expert. A weakening of the US dollar would improve the competitiveness of American companies.
As “Marketwatch” author Brett Arends writes, this intention could drastically reduce the value of the US dollar compared to other international currencies in order to make products manufactured in the USA cheaper and thus boost economic production- behind the current policy of US President Donald Trump, which is primarily shaped by tariffs and threats. “Trump tries to weaken the dollar by turbulence,” Arends is convinced.
Mar-a-Lago-Accord: Economic chaos as a strategy
In his strategy for weakening the US dollar, Trump apparently follows – at least in parts – a paper from the economist Stephan Miran from November 2024 entitled “A User’s Guide to Restructuring the Global Trading System”, in German: “A user manual for restructuring the global trading system”. Miran is now the chairman of the Council of Economic Adviser, the president’s advisory committee on economic issues, and had cited ways in which a devaluation of the US dollar could be achieved. Because Miran also blames the strength of the US dollar for the problems of the US economy.
Trump now apparently relies on several measures: The introduction of high tariffs should influence international trade and create a threatening backdrop while the so-called Mar-A-Lago-Accord-named by Miran according to Trump’s estate in Palm Beach and the mutually agreed Plaza-Accord for weakening the US dollar from 1985-provides for an aggressive restructuring of the US state bonds. This time, however, apparently without consultation and for coercion. “Marketwatch” author Brett-Arends therefore also describes the plans as “Mar-a-Lago-Discord”.
LBBW chief economist Moritz Kraemer explains how these plans look exactly: “Foreign creditors should convert their US state bonds into such with a long term (100 years!) And lower or no interest. This would make less bonds every year, and the creditors would not ask for dollars for reinvestment. The website of the LBBW. “Of course, no creditor would voluntarily agree with this exchange. Unless he was threatened with tariffs or with it to withdraw military protection. And that is the plan,” continued the LBBW expert. Specifically, this would mean that those who participate in the restructuring of the US state bonds are spared high tariffs and are still under the military protection of the United States. If you don’t participate, you have to see for yourself how you can cope.
However, Kraemer warns that Trump’s plan could have far-reaching consequences for the stability of the global economy even in the event of a success: “In all financial crises, the US state bond was the safe harbor. This Mar-A-Lago-Accord would go to the port. A financial crisis global would result,” said LBBW boss.
Does Trump deliberately bring about a US recession?
As “Marketwatch” economic editor of Arends writes, it could also be the plan of the US president to bring about a recession in the United States. “Trump and the finance minister want to reduce the returns in a recessive, chaotic environment to justify the adoption of their tax plan,” said an unsolicited expert towards Arends, because the US government cannot afford to finance its massive deficits and enormous public debt, which would be even greater through the planned extensive tax cuts. “It seems as if he needed chaos to get his tax plan through,” continued the anonymous expert according to “Marketwatch”.
Risky game with the US dollar
It is questionable whether Donald Trump’s procedure will lead to the desired success at all. “There is no safer way to undermine confidence in the dollar,” said LBBW expert Kraemer. And “Marketwatch” author Brett Arends also points out that the returns of US state bonds and the inflation expectations would currently move exactly how Trump needs it to successfully weaken the US dollar. The returns of the US state bonds fell sharply in the first six weeks of his reign, but have now started to rise again – and the inflation expectations are also going up.
Arends also expressed a warning to investors in US shares because they would largely ignore the situation. “I am still surprised at how complacent US stock investors face this attempt at a revolution in American finance. Where is the Mar-A-Lago discord discount in the US stock evaluations,” said the “Marketwatch” author. In his opinion, the chances of winning in foreign currencies and international shares are currently better than with the US counterparts.
Editor finance.net