U.S. President Donald Trump's tariff policy has triggered global stock market volatility and caused "stock-bond-currency" triple damage to the U.S. itself. Afterward, Trump announced that the reciprocal tariffs on countries other than China would be postponed for 90 days. U.S. Treasury Secretary Scott Bessent stated that all these scenarios were within Trump's plan. Trump had previously mentioned that he was working on something big, saying, "There will be a transition period because we are doing something big, and we are bringing wealth back to the United States." What exactly is Trump trying to accomplish? For this, outsiders believe that Trump's reversal of America's post-WWII free trade philosophy may stem from guidance provided by a so-called "Mar-a-Lago Accord."

The Washington Post pointed out that President Trump's sudden wave of tariff wars has caused unprecedented trade disruptions and impacted the global economy in unpredictable and costly ways, particularly with the spiral of tariff retaliation between China and the U.S., which could reduce bilateral trade worth more than $600 billion to near zero. Currently, the cumulative tariffs on Chinese goods by the U.S. have reached 145%, while China's tariffs on U.S. goods are at 125%.

Tariff War Undermines U.S. Global Safe Haven Status

CNA reported that U.S. Treasury bonds, long considered the safest haven, are being sold off, indicating that the U.S.'s global safe haven status is showing signs of wavering after Trump's tariff axe fell. The New York Times noted that the yield on 30-year U.S. Treasuries surged to fluctuate between 4.74% and 5%; the 10-year U.S. Treasury yield rose to around 4.5% on the 11th day, indicating that funds are rapidly withdrawing.

Australian Broadcasting Corporation News (ABC News) believes that the Trump administration has a grand strategy to reshape global trade, promote the return of manufacturing, reduce budget deficits and cut debt, and make allies pay for U.S. security umbrella. Tariffs are just the first step. This grand strategy is called the Mar-a-Lago Accord.

Mar-a-Lago is located in Florida and is right on the beachfront. Associated Press.

What is the Mar-a-Lago Accord?

According to a comprehensive analysis by ABC News and the Lowy Institute, the Mar-a-Lago Accord is not an official document but rather a conceptual integration of a 41-page "Guide to Rebuilding the Global Trade System" paper written last November by Stephen Miran, chairman of the White House Council of Economic Advisers.

Miran argues that the overvaluation of the dollar is the fundamental cause of the U.S.'s massive trade deficit. "This overvaluation reduces American export competitiveness and makes imported goods cheaper, thus putting American manufacturing at a disadvantage," and therefore draws inspiration from the 1985 Plaza Accord to propose the concept of the Mar-a-Lago Accord. Mar-a-Lago is Trump's vacation residence in Florida.

In 1985, the U.S. and its allies—West Germany, Japan, Britain, and France—signed an agreement at the Plaza Hotel in New York to guide surplus countries (like West Germany and Japan) to appreciate their currencies, and deficit countries (like the U.S.) to devalue theirs, jointly reducing the value of the dollar to promote American industrial development.

Treasury Bonds at Zero Interest for Protection Umbrella; Establishing an America-Centric Exclusionary Trade Zone

Similar to the 1985 Plaza Accord, one of the core elements of the Mar-a-Lago Accord is also to have other countries' currencies appreciate to enhance U.S. export competitiveness; another design is to have foreign governments holding U.S. bonds convert them into 100-year non-transferable zero-coupon bonds, and proposes establishing an American sovereign wealth fund and a cryptocurrency stability fund.

The mechanism to achieve these goals is through imposing significant tariffs and withdrawing the U.S. security umbrella, forcing trading and investment partners to comply.

Another core idea is the establishment of the "Fair Trade Area" concept. Miran criticized the current global free trade system for neglecting principles of fairness and reciprocity, allowing non-market economies like China to gain excessive benefits at the expense of American jobs, wages, and strategic autonomy.

Therefore, a new fair trade area should be established, allowing only those willing to convert their U.S. bonds into "century bonds" to enjoy tariff preferences; countries unwilling to give up interest on U.S. bonds will not only be excluded from this market but will also face higher tariffs.

Some experts in China believe that the calculation behind the Mar-a-Lago Accord is to impose significant tariffs to adjust trade flows, promote the return of manufacturing to the U.S., increase tax revenue, and enhance American industrial security. At the same time, establish a sovereign wealth fund capable of supplementing the treasury, designing the conversion of short-term U.S. bonds into ultra-long-term "century bonds," making other countries sell dollar assets, and monetizing debt.

Experts: Logical Contradictions Exist, Difficult to Achieve Debt Reduction and Job Revitalization

However, experts believe that the consequences of the Mar-a-Lago Accord may severely disrupt the global financial system and are unlikely to achieve the main objectives of reducing deficits and revitalizing high-paying jobs.

Jenny Gordon, former chief economist of Australia's Department of Foreign Affairs and Trade, pointed out that there are many logical flaws in the Mar-a-Lago Accord. One is that if the U.S. wants to bring manufacturing back, it needs to rely on foreign investment borrowing to invest in domestic industries, which will push up the dollar exchange rate, contrary to the accord's goal of "weakening the dollar to enhance competitiveness."

Secondly, forcing countries to convert U.S. bonds held as foreign exchange reserves into long-term bonds will reduce the liquidity value of U.S. bonds, prompting countries to reduce the use of the dollar and impact the role of the dollar as a reserve currency, which is not what Trump desires.

In addition, the main reason for the loss of high-paying positions in America's industrial belt is not global trade. Factors such as changing consumption patterns, technological progress, and population aging have a greater impact.

She pointed out that the assumption of the Mar-a-Lago Accord is that economic coercion and gunboat diplomacy can force trading and investment partner countries to appreciate their own currencies and accept America's debt restructuring arrangements. However, Trump's treatment of allies makes it difficult to believe that adherence to such agreements will lead to stability, even if quite a few countries are willing to cooperate, this cannot solve America's deficit problem.

Original article: https://www.toutiao.com/article/7493042505480258060/

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