At the heart of this strategy lies the reassertion of the “America First” doctrine, which Trump now seeks to enforce through a mix of aggressive tariff policies and a deliberate weakening of the US dollar. Some call this concept the “Mar-a-Lago Agreement.”
This strategy hinges on a key principle known as “competitive currency devaluation,” whereby countries intentionally reduce the value of their currencies to boost export competitiveness and correct trade imbalances.
While this concept is not new, echoing the coordinated Plaza Accord of 1985, it marks a stark departure in its unilateral nature.
The original Plaza Accord was a multilateral initiative involving Japan, West Germany, France, the UK, and the United States, all working together to address the rising dollar.
In contrast, Trump’s current policy lacks international coordination, thereby increasing the risks of global financial instability.
Trump justified this approach with a bold statement: “The world has been taking advantage of us through the dollar. It’s time we regain control — on our terms, not theirs.”
Global financial community warnings
This approach has triggered deep concern within global financial circles.
In its 16 April 2025 issue, The Economist published a warning-laden article titled “How a Dollar Crisis Would Unfold,” highlighting the risk of a collapse in confidence in the dollar due to sustained pressure from US policies.
Another article, “A Flight from the Dollar Could Wreck America’s Finances,” detailed the dangers of capital flight and the declining share of dollars in global central bank reserves.
Institutions like the International Monetary Fund have echoed these warnings, cautioning that persistent weakening of the dollar could trigger widespread financial turbulence.
In a time when the world is still reeling from successive economic and geopolitical shocks, the global system demands greater, not less, monetary stability.
The Wall Street Journal framed Trump’s move as “a revival of an old theory, deployed with confrontation rather than coordination,” warning that failure could spell disaster not just for the US, but for the global economy.
Gold: The haven rises again
In light of these developments, gold prices have surged, as investors seek refuge in more stable assets. The precious metal is increasingly viewed as a store of value amid growing concerns about the dollar’s future.
Central banks, particularly in developing economies, are increasing their gold reserves as a hedge against potential future currency volatility.
The Mar-a-Lago economic doctrine — if pursued vigorously — could drive even more capital away from traditional US assets and further elevate gold’s status as a global financial anchor.
China, Europe position themselves
Meanwhile, China is pushing ahead with efforts to internationalize the yuan. Through a series of bilateral trade agreements, particularly in energy markets with East Asian and Middle Eastern countries, Beijing is challenging the dollar’s dominance in cross-border settlements.
In parallel, the European Union is working to maintain the euro’s relevance as a stable reserve currency, backed by the European Central Bank's disciplined monetary policy.
Neutral currencies, such as the Swiss franc, are also attracting attention, and discussions are increasing around the future role of asset-backed stablecoins.
These could form part of a multipolar monetary system, one that curtails Washington’s longstanding ability to wield the dollar as a tool of geopolitical power.
Yet, even as these alternatives gain ground, no single currency has emerged as a credible substitute for the dollar.
The US dollar still accounts for approximately 58 percent of global foreign exchange reserves, compared to 20 percent for the euro, 5.8 percent for the yen, and 2.17 percent for the Chinese yuan.
Gold now represents 15.2 percent of global official reserves, reflecting the world’s ongoing search for value preservation in times of uncertainty.
Dollar dominance at a crossroads
Since the end of World War II, the US dollar has served as the linchpin of the international financial system. Its global hegemony has granted the United States unique privileges, including the ability to finance deficits by issuing debt in its currency.
Trump’s policies, however, risk undermining the very foundation of this trust. Should doubts around the dollar's stability deepen, central banks around the world may begin restructuring their reserves, increasing allocations toward gold, the euro, the franc, and even the yuan.
In this context, developing countries, which have long relied heavily on the dollar, face an urgent need to diversify their foreign reserves.
Doing so would help insulate their economies from US monetary shocks and enhance their financial resilience in a rapidly changing global order.
Many of these countries are already taking steps toward diversifying their strategic reserves to ensure greater stability and sustainable development.
Global gamble
Ultimately, Trump’s dollar policy represents more than just an economic manoeuvre; it is a direct challenge to the post-war monetary order.
To some, it may appear as a long-overdue correction aimed at restoring fairer global trade. To others, it is a reckless gamble that could unravel the very system that has underpinned global finance for nearly a century.
As the world watches closely, one thing is clear: the future of the dollar and America’s financial leadership now stands at a critical crossroads.
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