Team Trump wants a weaker dollar. But it seems confused on how to get it. Tariffs and expansionary fiscal policy are a recipe for a stronger, not weaker, dollar.
Nor is both demanding a dollar devaluation and threatening taxes on countries shunning dollars a way to fulfil the Republican promise to protect the dollar’s global dominance. It would jack up US government borrowing costs and undermine the use of the dollar as a lever for financial sanctions. It flies in the face of the old dictum — you can’t devalue your way to prosperity.
Calls for an “Mar-a-Lago Accord” also seem chimerical. The 1985 Plaza Accord traded US fiscal consolidation for other countries boosting domestic demand, not only actions to weaken the dollar. Today, US fiscal policy is heading in the wrong direction; major central banks are independent and target inflation; and other countries can’t readily boost domestic demand given their own fiscal woes.