Proposals for a new international currency agreement, dubbed the "Mar-a-Lago Accord," are gaining attention within the Trump administration. This initiative resembles past agreements like the Plaza Accords of the 1980s or the Bretton Woods agreement from the 1940s. Stephen Miran, who leads the Council of Economic Advisers, has outlined a framework for this accord. Additionally, Treasury Secretary Scott Bessent has shown interest in a global economic restructuring.
Supporters argue that such an agreement is necessary for balancing global trade and capital flows. However, questions remain about whether the interests of other countries align enough to make this work. There’s also uncertainty about whether the U.S. can effectively carry out a strategy to bring back manufacturing jobs.
The Trump administration’s push for a new monetary order isn’t entirely unexpected. Interest in international currency agreements has been rising across the political spectrum for years. In 2017, a piece in American Affairs called for a new Bretton Woods agreement. More recently, Representative Ro Khanna, a Democrat, suggested a Plaza-style accord with China. This conversation has been ongoing, with roots tracing back to President Bill Clinton, who called for a new financial framework in 1998 after the Asian Financial Crisis.
Historically, many currency agreements have emerged in response to economic chaos. For example, after World War I, Britain attempted to return to the gold standard, which ultimately failed. The Bretton Woods system also faced challenges before ending in 1971 when President Nixon suspended the dollar’s convertibility to gold. The current monetary system began in 1994 when China devalued its currency, and it has persisted without a formal agreement.
Despite the lack of a structured system, the U.S. has tolerated this monetary non-system for various reasons. Many believed that the end of the Cold War would usher in a new era of global cooperation, with assumptions that offshoring would not harm the U.S. economy. However, this has led to rising asset prices and high levels of debt, which have strained the American industrial base.
Today, the situation is dire, with critical sectors, including defense, feeling the strain of deindustrialization. This has prompted the U.S. to seek a fundamental economic restructuring. However, the challenge lies in convincing China to participate in a new currency accord. China has consistently prioritized manufacturing and export dominance over consumer welfare, making it unlikely to agree to a deal that could undermine its position.
China’s economic model is showing signs of stress, with rising debt levels and a property crisis. As countries around the world, including Germany, begin to impose trade barriers against China, the dynamics are shifting. The U.S. may need to offer more attractive proposals to its allies, such as allowing greater regulatory freedom over American tech companies, to gain support for a new currency agreement.
For any deal to work, the U.S. must also present a credible plan for revitalizing its manufacturing sector. This involves coordinated policy efforts and investment in key industries. The current economic landscape suggests that a new currency accord could be beneficial, but it must be part of a broader strategy to compete with China’s manufacturing strength.
As the Trump administration explores this potential agreement, the real question is whether the U.S. has the economic and diplomatic strength to make it happen. The urgency for a new arrangement is clear, but achieving it will require careful negotiation and commitment from all parties involved.