According to relevant Canadian reports, the United States may suddenly put forward an "unconventional economic idea" - known as the "Mar-a-Lago Accord".

Image source: theglobeandmail

So, what exactly is this "Mar-a-Lago Accord"? The name comes from Trump's private estate in Florida, Mar-a-Lago.

This plan, which is said to completely transform the global financial landscape, has been circulating within Trump's administration, although Trump himself has never mentioned it. However, the Treasury Secretary appears to be very supportive.

Where does the problem lie? Supporters believe that the US dollar is too strong!

Since the 2008 financial crisis, due to the US economy standing out alone, the US dollar's exchange rate against a basket of major currencies has risen by about 40%.

The result is that US exports are becoming more expensive, while imports are much cheaper, causing a trade deficit surge. Currently, it exceeds $1 trillion annually.

In simple terms, persuading US trading partners to collectively "raise" their currencies will make US exports cheaper and imports more expensive.

This move actually has a precedent - in 1985, the US signed the "Plaza Accord" with Japan, France, the UK, and West Germany, successfully devaluing the dollar and alleviating the trade deficit.

However, because of this agreement, Japan's economy collapsed directly, and for the next thirty years, it has been struggling...

Now, the drafters of the "Mar-a-Lago Accord" are Stephen Miran, who was nominated by Trump as the candidate for Chairman of the White House Council of Economic Advisers.

But this accord has immediately fallen into a self-contradictory whirlpool: weakening the dollar while maintaining its status as a global reserve currency; raising import prices yet hoping to lower inflation; reducing the trade deficit without affecting the safety of American reserves...

Although the "Mar-a-Lago Accord" is still just a concept, Trump's unpredictable style in his second term makes it almost impossible to predict what he will do next - so everything is possible.

Tariffs are at the core of the "Mar-a-Lago Accord".

For Canada, which heavily depends on the US as its largest trading partner, this issue is crucial.

The Bank of Canada has issued a warning: if the US imposes large-scale tariffs, it will have a "highly destructive" impact on many aspects of the Canadian economy - employment, GDP, inflation, exchange rates, consumption... Almost nothing will be spared.

Besides, if the US pressures major global economies to impose tariffs, it will reduce global economic activity, indirectly impacting Canada's exports.

This move can be described as "if you affect me by one point, I fall by three points".

Another idea in this accord is to have foreign creditor countries (such as China and Japan) purchase ultra-long-term or even zero-interest US Treasury bonds.

Although the possibility of implementation is low, once implemented, it will inevitably cause a sharp devaluation of the dollar and shake the global financial order.

For Canadian families and investors, this could mean a decrease in the value of their dollar assets, higher costs for importing American products, inevitable inflation, and difficulty in lying low - neither asset values nor living costs will be spared.

Another key point of the "Mar-a-Lago Accord" is to link economic concessions with US military protection, which means "soft and hard measures combined".

White House economic advisor Milan直言:"National security and trade are inseparable."

The Trump administration believes that the security protection provided by the US should be rewarded with some form of economic return from other countries.

Under this logic, if other countries wish to continue receiving US protection, they should assist US businesses, such as cutting local subsidies, not retaliating against US tariffs, aligning with the US in restricting trade with China, or making significant investments in the US.

In other words, "If you want to continue hiding under the US 'umbrella'? You can, but don't impose tariffs on the US, don't subsidize your local enterprises, support the US, and invest in the US."

Especially since Canada's defense budget has been shrinking continuously, and its influence in the international security sector has become weaker, Canada's negotiating position is being rapidly weakened, with dangers lurking everywhere!

Canadian netizens call Trump's Mar-a-Lago Accord "This isn't mafia business, is it...!"

"Sounds like Plan B if the tariff plan fails"

In March, Mark Carney announced that the next Canadian government would negotiate new trade and security arrangements with the Trump administration, which may redefine Canada's role as an ally of the US, forcing the government to balance sovereignty, military power, economy, and strategy.

Carney clearly stated that Canada can no longer rely on "low-profile diplomacy + slow negotiation" to stabilize its relationship with the US.

Image source: theglobeandmail

Meanwhile, Trump posted, "I just had a very productive conversation with Canadian Prime Minister Mark Carney. We reached consensus on many issues and will meet immediately after the upcoming Canadian election to handle cooperation matters involving politics, business, and other topics. These will bring great benefits to both the US and Canada. Thank you all for your attention to this matter!"

After the election, will the new government still "sit idly by"? Whom do you support among the voters?

Original article: https://www.toutiao.com/article/7495625966749532683/

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