What if the definitions are only the beginning? What if President Trump had a bolder plan to reshape the American economy, regardless of the consequences?
Investors hope it is not. But they still pay attention to a concept known as “Mar-AGoGord”, which would return global capital flows significantly by permanently reducing the value of the US dollar, re-financing trillions of American debt, and putting the United States in more aggressive role with its commercial partners. Most of them doubt that it will serve as anything, but Trump is so unpredictable that investors learn to prepare for unimaginable.
an idea “Mar-A-LagoCordHe comes from Stephen Miran, who was the major strategic in Hudson Bay Capital investment last November when he wrote a 41 -page article on “the restructuring of the global trading system“Miran wrote from Trump’s perspective, explaining how the president could be fond of definitions and protectionistness as a basis for reshaping a lot of the global economy.
But now that Miran has become Trump’s whisper, investors want to know what he might be whispered. “Wall Street cannot stop talking about the Mar Lago Agreement,” Marketwatch announced earlier this month.
The main hypothesis behind the Miran plan is that the US dollar has been estimated for decades, which led to a chronic trade deficit – and manufacturing immigration from the United States to other countries such as China. Consequently, the opposite of this imbalance will require a reduction in the value of the US dollar, which is what Trump is preferred.
A man with a plan: Stephen Miran, Speaker of Economic Advisors, witnesses the Speaker of the Economic Advisors, during a confirmation session in the Capitol Hill in Washington, DC, February 27, 2025 (Reuters/Annabel Gordon) ·Reuters / Reuters
When the dollar is relatively strong, imports become cheaper for Americans, while American exports to other countries become more expensive. This is shown as a growing commercial deficit in the goods, with the growth of the gap between imports and exports. The goods trade deficit was $ 1.2 trillion in 2024, the highest level ever and 175 % greater than the deficit in 2000.
The American economy is supported by consumption, and more imported products at low prices enhance the power of Americans. The trade deficit management is not harmful if the American economy is healthy, as it was high levels of investment, innovation and job creation.
Many experts also believe that the strong dollar is better for the United States than the weak dollar. “The Mar-A Lago Agreement will be meaningless, ineffective, shakes stability, and only leads to the erosion of the prominent role of the dollar in the global financial system,” economists Stephen Kamin and Mark Sobil Recently.
They argue that the strong dollar gives American companies distinct to reach foreign markets while enhancing economic stability at home.
It is true that many of the minimum assembly work has left the United States and that work in manufacturing has decreased. But manufacturing has decreased for years as a percentage of production in all advanced economies in the world, as growth comes from technology and services. Since the 1980s, manufacturing has decreased as a share of GDP from the United States from about 25 % to less than 10 %. However, the industrial product in America is almost as high as it was ever. Manufacturers simply make more workers due to automation, technology and innovation.
If there is a fatal defect in Trump’s economic thinking, then he is for him Manufacturing.
The service economy employs 86 % of American workers today. Only 8 % work in manufacturing. The United States has a long -term trade surplus in services, which is exported more than it imports. “Are the association’s functions good? Yes,” said economist Mary Leesm from the Peterson International Economy Institute in the last episode of Yahoo Finance Capitol Gains. “But there are many other good functions in the United States.”
Despite some coarse spots, the United States has achieved the world’s most dynamic and durable economy for at least 40 years. If the United States has been subjected to the disabled in one way or another by an economy with lost exaggeration and an inverted trading system, then this is a matter that any country will carry with pleasure.
Trump, however, is based on his entire economic plan in strengthening the manufacturing sector.
In the Mar-A-Lago plan, the customs tariff will be the beginning. Reducing the value of the dollar will come after that. To do this without printing money and running fugitive inflation, the Trump administration will have to interfere in the currency markets. If other countries come across the Trump plan to reduce the value of the dollar, the site can gather Other pavilion events in financial history.
However, the volunteer agreement is unlikely, as commercial partners will end up in a non -favorable position. “The conditions do not seem good for the voluntary currency agreement,” Capital Economics explained in a recent analysis of the idea. “But the forced deal imposed by the United States by the United States using threats or temptations may be possible.”
The “forced” deal includes a way to reduce the flow of foreign funds to the assets of the US dollar, especially the securities of the Treasury. Miran suggested, for example, a new user fee on some foreign purchases of the cabinet, which reduces the demand for the cabinet and weakens the dollar. But this would force interest rates in the United States, and Trump wants lower rates, not higher.
forced? US President Trump, during the opening presentation inside the capital, is one on the opening day of his second presidential term, in Washington, January 20, 2025. Reuters/Carlos Baria ·Reuters / Reuters
So there should be some correction for high rates.
One of the concepts here is that the Trump team can force the current foreign securities holders in one way or another, which has the utmost maturity for 30 years, to a new “century” bond with a 100 -year -old entitlement. Fishing is that the bonds of the century will be difficult to circulate in public markets in the way that the treasury is now trading. Therefore, there should be a new way to provide liquidity if bond holders need this, such as short -term loans of federal reserves.
There are other transformations and wrinkles. Trump, for example, talked about the creation of an American sovereign wealth box, which, if present, can use it to force the dollar to decline by buying huge sums of foreign assets. The United States can take advantage of its role as a defensive guarantor of countries such as Taiwan, South Korea and many Europe to try to force them to buy the bonds of the century. Trump can also hang the identification relief as an incentive for foreign assistance in reducing the value of the dollar.
If this scheme appears significantly complicated, then this.
“There is no easy way to weaken the dollar,” Economy Oxford said in a report on March 20. “The achievement of consumption that we believe will be necessary to have a significant impact on the trade deficit to involve swimming against strong tide. The costs imposed on economies and financial markets in the United States and beyond may be great.”
These costs are likely to include high prices for both imported and local goods, higher interest rates, and any economic damage that may be caused by turmoil.
The worst results are to destroy the investor’s confidence in the sanctity of the US Treasury, which can occur if the United States explains anything as hypothetical, or refusing to pay, which is entitled to the treasury holders legally. This would definitely reduce the value of the dollar, but at the destructive cost of much higher rates on treasury bonds to compensate for their holders for the risk of losing their money. If this happens, US government borrowing costs will explode, and the giant national debt, which now 36 trillion dollars, can now become not sustainable.
Definitions as multiple: President Donald Trump at the White House in Washington, DC, United States, March 28, 2025. Reuters/Evlin Hakstein ·Reuters / Reuters
Economists also indicate that there are better ways to address some legitimate problems in the market. One of the reasons why the dollar makes it a little exaggerated today is the huge amount of debt issued by the Treasury to finance the annual deficit, which is now almost 2 trillion dollars per year. “If the American domestic demand is reduced by financial emphasis, it will have an additional benefit to put the American public debt on a more sustainable path,” said Capital Economy Economy.
There are also real losses for global trade, including American manufacturing cities that have lost employers with no one to solve them. The growth industries that attract them are likely to be like green energy, data centers, storage and health care for such areas are more effective than trying to adhere to the institutions of the past. There is also a constant need for merchants and an incompatible between the skills that companies need and the skills that workers enjoy is that policy makers can do a much better job.
Trump, of course, sees definitions as a type of multiple that can solve many problems, including some of them may not be problems at all. Investors generally hate Trump’s tariff, which led to the values of stocks and raised new fears of inflation.
But the customs tariff may be to tame medicine compared to other doses that Trump may try to break.
Rick Newman is a big column writer Yahoo financing. Follow it Blouse and x: @Rickjnewman.
