Donald Trump, who has been questioning the strength of the US dollar for a long time in 2017, became the President of the US. He believes that the high value of the dollar is the main reason for the US trade deficit and the manufacturing industry being transferred abroad. Given their commitment to make major changes in policies in their second term, many analysts believe that Trump can try to devalue the dollar by pressurizing global trade partners. This can be potentially called "Mar-e-Lago Agreement".
Trump's main goal is to convert America into a manufacturing superpower or reduce its trade deficit. In 2024, the US recorded a trade deficit of over a trillion dollars for the fourth consecutive year. This shows that the production capacity in the country is decreasing and the US market is becoming more dependent on imported goods.
However, despite this trade deficit, the unemployment rate in the US remains historically low. Therefore, Trump's priority is to promote more manufacturing in the US and reduce dependence on imports instead of increasing employment.
The US dollar is the world's most impressive currency because it is considered a global "value of value" and most central banks in the world keep it as their property. The strength of the US economy and the freedom of the Federal Reserve makes it reliable. About 50% of the global trade is in transactions and 60% of the world's total foreign exchange reserves are stored in this currency. Due to the high dollar purchasing power, imports in the US are more cheaper, which reduces the demand for domestic production.
If Trump takes an initiative such as "Mara-e-Lago Agreement", he may force other business partners (such as China, European Union, India) to agree to control the price of US dollar. This may reduce the value of the dollar, which will make American exports cheaper and reduce trade deficit.
However, there are many risks of this strategy. Dollar weakening may increase inflation. The economy of other countries may be affected. There may be instability in the global market. Trump's policies have always given priority to American interests. If they plan to devaluate the dollar, it can reduce America's trade deficit, but create new challenges for the global economy.
