DXY: On Mar-a-Lago Accord - the new US economic policy - Commerzbank

There has been a lot of talk in the public discussion lately about the conceptual construct of a 'Mar-a-Lago Accord' - so much so that it is no longer really clear what it is about. But, before discussing this, one must first define what they mean. To do this, it is helpful to consult a strategy paper by Stephen Miran, Chair of the US President's Council of Economic Advisers, Commerzbank's FX analyst Ulrich Leuchtmann notes.

US must not give away security and access to its domestic market for free

"His argument is a variant of the new neorealist thinking in US foreign policy: the US is being taken to the cleaners because it is tied into alliance, world economic and financial systems that put it at a disadvantage. Specifically, the USA would provide military security for its allies and give the world access to its domestic market without getting anything in return. On the contrary, the de- industrialization of the USA and the high valuation of the US currency, which represents an economic burden, would put the USA at a disadvantage."

"The US should no longer give away security and access to its domestic market for free, but should charge a price for it. This is the US government's foreign policy and economic policy concept. With the following aspects: Alliances are seen as a hindrance, that is the 'neorealist' dimension of the new US policy; Instead, power projection is preferred, in particular import tariffs and the threat of them."

"What are the objectives of this US policy? A weakening of the US Dollar, a debt restructuring and thus a debt relief for the US treasury, a reduction of the US trade deficit and, as a result, a re-industrialization of the US economy."