What is the "Mar-a-Lago Agreement"?

Without going into too many details, here are a few key points:

This article by the White House economic advisor is titled "A User's Guide to Reshaping the Global Trade Landscape," and its purpose is to provide a toolbox, not every tool will necessarily be used. However, it appears that Trump is currently advancing according to this white paper.

0/ To be clear: the root cause of economic imbalance lies in the persistent overvaluation of the dollar, which hinders the balance of international trade, and this overvaluation is driven by a lack of elasticity in the demand for reserve assets. As global GDP grows, the burden on the U.S. to fund reserve assets and national defense becomes heavier, as the manufacturing and trade sectors bear most of the costs.

1/ Tariffs on China may gradually increase to 60%. I think this can basically be said to signify a decoupling between the U.S. and China. There probably won't be significant negotiations between the two - perhaps the only seemingly likely event is whether Xi and Trump will have a conversation.

In simple terms, the tariffs added in Trump 1.0 had no impact on China's manufacturing status, and now the intensity is set to increase. If Trump 2.0 completes the tariffs, aside from having over $700 billion in foreign exchange reserves, Trump will have no leverage over China. If the supply chain and finance decouple, my guess is that the U.S. will inevitably be forced out of the Western Pacific - because there would be no reason to keep U.S. troops there.

2/ Tariffs on other global regions will gradually increase to 10%, but the U.S. will create a system of upgrades and downgrades; simply put, if you listen to the U.S., the tariffs will be lower, and if you don't, they will be higher. The standards for compliance are shown in Figure 1.

This tool can be used to force other countries to join the ranks of tariffs against China, thereby forming a multilateral tariff response.

3/ The essence of the U.S. problem is the issue of currency overvaluation brought about by its status as a reserve currency. Therefore, to some extent, the dollar needs to depreciate.

President Trump views tariffs as negotiation chips to reach deals. It is easier to imagine that after a series of punitive tariffs, trade partners like Europe and China would be more willing to accept some form of currency agreement in exchange for lower tariffs. Since currency agreements are usually named after their negotiation locations, such as the Bretton Woods system and the Plaza Accord, I will poetically describe the potential agreement reached by the Trump administration as the future "Mar-a-Lago Agreement." - This is the origin of the Mar-a-Lago Agreement.

4/ How to depreciate the dollar? - The Mar-a-Lago Agreement

Specifically, the U.S. hopes that foreign governments will sell their dollar reserves and exchange some of their debt for long-term U.S. Treasury bonds (for example, 100-year bonds). This would reduce the total amount of reserves (pushing the dollar to appreciate), and the remaining debt would be low-interest long-term debt (which the U.S. does not have to pay interest on). The market risk of holding long-term debt can be mitigated through swap lines with the Federal Reserve or the Treasury's Exchange Stabilization Fund. I analyzed earlier that a 100-year zero-interest Treasury bond is equivalent to default, so this is essentially a blatant way to extract money from the other party.

Why would others agree? The tariff stick, bundled with security (such as NATO and troop presence).

To put it bluntly, it’s about sucking blood from "allies."

Such a Mar-a-Lago Agreement lays the foundation for a 21st-century version of a multilateral currency agreement. President Trump will hope that foreigners will help pay for the security zone costs provided by the U.S. A depreciated dollar would help create manufacturing jobs in the U.S. and redistribute total demand from other parts of the world back to the U.S. The maturity of reserve debt helps prevent financial market turmoil and the resulting economic losses. An agreement can achieve multiple goals.

5/ Other ways to depreciate the dollar:

Including imposing an interest tax on foreign dollar reserves, reducing the attractiveness of dollar assets to foreigners.

The U.S. could also purchase foreign assets; the Gold Reserve Act authorizes the Treasury Secretary to sell gold in a manner "that the Secretary deems to be in the public interest," providing additional potential funding for building foreign exchange reserves.

免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。