QAnon for Tariffs
To the untrained eye, Donald Trump’s tariff policy over the past two months has looked like an incoherent, inconsistent, self-destructive mess. But have you considered the possibility that it is, in fact, the first step of a carefully orchestrated master plan to revive American manufacturing, reduce the national debt, reconfigure the international-alliance system, and deliver the greatest geopolitical deal of the century?
That is the thrust of a new theory that has been gaining currency in Washington, on Wall Street, and in the financial press. The grand bargain that Trump is supposedly planning to strike has even been given a name: the Mar-a-Lago Accord.
The outline of the theory was first articulated not in a MAGA subreddit, but in a November paper by Stephen Miran, an economist who now chairs Trump’s Council of Economic Advisers. Many of the theory’s basic tenets have also been endorsed by Treasury Secretary Scott Bessent. In its telling, Trump’s flurry of new trade barriers isn’t intended to achieve a particular strategic concession or short-term economic benefit. The goal is instead to force other countries to the table for a grand bargain. Claims that the tariffs are about fentanyl trafficking or illegal migration are simply a decoy, and their seemingly shambolic implementation is just a way to keep the rest of the world suspended in a state of shock and awe. Sure, there might be some bumps along the way, as consumers and businesses scramble to adjust to the new restrictions; the ensuing tumult might even trigger a global recession. But that’s by design. The more Trump can portray himself as a madman willing to tank the world economy, the more fearful and desperate other countries will become for any kind of reprieve.
[Rogé Karma: Trump’s most inexplicable decision yet]
Once foreign leaders are practically begging for an end to tariff-induced madness, Trump will summon them to his Florida compound, where he will outline a series of demands. First, America’s trading partners must engage in a coordinated effort to raise the value of their own currencies relative to the dollar, a move designed to make American goods cheaper to sell abroad. Countries that have large trade surpluses with the United States, such as Germany and China, may also be required to make major investments to build factories in the American heartland. Foreign central banks will agree to swap their existing holdings of U.S. debt with “century bonds” that don’t pay any interest for 100 years, in effect providing free financing to the United States. Countries that comply will be given relief from tariffs alongside a guarantee of military protection; countries that refuse will be faced with even steeper tariffs and no military support.
These hypothetical provisions tie together two of Trump’s longtime preoccupations: the scourge of the strong dollar and the free-riding of America’s allies. Because of high demand for the world’s global reserve currency, the U.S. dollar tends to be more expensive than it otherwise would be. This in turn makes American exports more expensive, putting American companies at a disadvantage. In Trump’s mind, this dynamic is wholly the result of foreign governments’ currency manipulation and is largely responsible for the decline of American industry. Trump also believes that those same governments refuse to pay their fair share in defense spending, forcing the U.S. to overspend to protect its allies—a project that has driven the national debt to unsustainable levels.
Trump’s grand bargain is designed to put an end to all of that. A weaker dollar will restore America’s manufacturing greatness. An influx of foreign investment will supercharge the U.S. economy. Interest-free financing will help tame the national debt and spread the responsibility of funding global security. Clearly drawn lines between America’s allies and its adversaries will usher in global stability. “Such an architecture would mark a shift in global markets as big as Bretton Woods or its end,” Miran writes, referencing the 1944 agreement that birthed the modern trade regime and the 1971 decision to move the world off the gold standard. The Mar-a-Lago Accord will enter the annals of history as the deal of the century.
[William J. Bernstein: No one wins a trade war]
This theory has somewhat implausibly gained adherents, if cautious ones, in respectable quarters. Multiple Wall Street firms have publicly briefed their clients about what the Mar-a-Lago Accord would mean for their investments, and dozens of credulous articles have been written about it. “What investors must grasp right now is that Trump’s recent actions are not ‘just’ capricious,” writes Gillian Tett, a columnist and member of the editorial board for the Financial Times. “His team’s vision has a potent internal logic. The current chaos is as much a feature as a bug.” The president’s critics “assume that Trump will huff and puff until reality exposes the emptiness of his economic rationale,” writes Yanis Varoufakis, the left-wing former finance minister of Greece, in an instance of international horseshoe theory. “They have not been paying attention: Trump’s tariff fixation is part of a global economic plan that is solid—albeit inherently risky.”
That’s one way of describing it. Another is that the Mar-a-Lago Accord theory is even more implausible than the more familiar theories of Trump’s actions that it seeks to replace. In its faith that Trump will one day dramatically unveil the product of his secret machinations, the Mar-a-Lago Accord theory has as much in common with QAnon as with economics.
To begin with, two of the principal goals are in direct conflict: Weakening the dollar would require foreign countries to sell off their large holdings of U.S. treasury bonds, but that sell-off would cause interest rates to rise, making the U.S. debt even more expensive to service. (This is where the magical “century bonds” supposedly come in: foreign countries lining up to give America enormous heaps of free money.) Even the core premise underlying the theory—that a weaker dollar is the key to reviving American manufacturing—is shaky at best. Almost every rich country, not just America, has seen a sharp manufacturing decline in recent decades, suggesting that the trend is about much more than the relative strength or weakness of a single currency. “It’s one thing if a plan makes sense in theory but not in practice,” Steven Kamin, an economist at the American Enterprise Institute and the former director of the Division of International Finance at the Federal Reserve, told me. “This one doesn’t even add up in theory.”
Perhaps the biggest hole in the Mar-a-Lago Accord narrative, however, was foreshadowed in Miran’s November paper. “There is a path by which the Trump Administration can reconfigure the global trading and financial systems to America’s benefit,” Miran writes, “but it is narrow, and will require careful planning, precise execution, and attention to steps to minimize adverse consequences.” If that’s true, then no one appears to have told the guy in charge.
Careful planning? Most of Trump’s tariff threats so far have been aimed at Canada and Mexico, which are outside the top-10 dollar-holding countries and therefore have little influence over its price, instead of countries such as Japan, India, and Switzerland, which hold lots of dollars. Precise execution? The Canada-Mexico tariffs themselves were announced, paused, unpaused, given sector-specific exemptions, then semi-re-paused in the span of six weeks, and Trump’s broader suite of tariff threats has been so haphazard that even key members of his own administration have been left completely unaware of what he will do next. Minimize adverse consequences? Far from grinding foreign countries into submission, the tariffs have prompted swift retaliation from allies and adversaries alike and produced a groundswell of anti-American nationalism even in a country as seemingly friendly as Canada.
In fact, Trump himself appears to have no interest in this plan. The president has never been shy about previewing the deals he wants to make (such as his promise to end the Russia-Ukraine war in 24 hours) or floating strange ideas that no one asked for (such as turning Gaza into a resort), yet he has not so much as mentioned the idea of a Mar-A-Lago Accord in public. At times, he has even seemingly gone out of his way to undermine it. Earlier this year, when rumors circulated that the BRICS member countries might create a new currency for international trade—the kind of move that would weaken the dollar—Trump threatened them with 100 percent tariffs if they tried to replace “the mighty U.S. dollar.” Instead, Trump has said that on April 2—which he calls “Liberation Day”—he will impose “reciprocal tariffs” on individual countries to match the trade barriers they have set on the United States. That idea, too, conflicts with the supposed logic of the Mar-a-Lago Accord, because the stated goal isn’t a grand geopolitical bargain; it’s simply to pressure countries into dropping their tariffs on U.S. imports.
Trump’s apparent lack of interest in the master plan attributed to him is probably a good thing. If he did somehow pull off the Mar-a-Lago Accord, disaster could follow. “Success” would mean the destruction of the alliance system that has delivered unprecedented peace and prosperity since it was created after World War II. It would mean a period of international economic chaos as countries scramble to find alternatives to the dollar. It could even trigger a global financial crisis by undermining faith in the U.S. Treasury market, just as the devaluation of subprime loans undermined faith in the mortgage market in 2008, as Kamin and the economist Mark Sobel have written. “The dollar might indeed fall,” they observe, “but not in a way that Trump would like.”
For now, the Mar-a-Lago Accord remains less a genuine plan than a way for Trump’s backers to put a strategic spin on the president’s inchoate impulses. The attention it has received reflects the intense demand for some kind of coherent tariff rationale. But the wait for an explanation may be long.
