Summary
Following fresh tariffs, Trump may escalate pressure on allies by leveraging America’s financial dominance.
Options include restricting dollar access via Fed swap lines or pressuring payment giants like Visa and Mastercard, risking disruptions in Europe.
Trump’s advisers suggest a “Mar-a-Lago accord” to force currency revaluations, echoing the 1985 Plaza Accord, though economists doubt its feasibility.
Such moves could strain global markets, weaken trust in the dollar, and provoke retaliation. European leaders are considering countermeasures, fearing economic coercion and financial instability.
This will trigger the world to move away from the Dollar as the currency for international trade, which will cause the collapse of the American financial sector.
Ironically, this would largely achieve Trump’s goal of lowering America’s trade deficits. A big reason why America runs such deep deficits is because the strength of the dollar makes it less attractive to buy from the US, but the dollar never weakens because it’s the global reserve.
Of course, when OPEC discussed moving away from the dollar Trump lost his shit, so it’s not like this is his actual plan. There’s no 5D chess here, they’re all idiots. Nor would intentionally devaluing the dollar to increase US exports be a smart idea, but it is something that has been seriously proposed by one of Trump’s economic advisors.
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