Donald Trump’s Current Trade Policy: A Plan Hidden in Chaos

At first glance, Donald Trump’s current trade policy might appear chaotic – tariffs against allies and rivals alike, with a seeming indifference to stock market crashes. Many have asked: Does this man even have a plan? Surprisingly, the answer is yes. Trump’s new economic team, led by Treasury Secretary Scott Bassett and Chief Economist Stephen Miran, is pursuing a three-phase strategy to upend the global economic order in favor of the U.S. Bassett speaks of dividing countries into three groups: green, yellow, and red. Green countries (close allies of the U.S.) would receive low tariffs, security guarantees, and preferential access to the U.S. dollar system, while red countries (adversaries) would be left “on their own” – having no special access and facing higher trade barriers. Yellow countries are those with an intermediate status. This new classification echoes past U.S.-led global orders (Bretton Woods system, neoliberal WTO era) and aims to refocus on American interests.

Why such a radical approach? Bassett and Miran view the deindustrialization of the U.S. as an existential threat. In the 1950s, manufacturing still accounted for around 28% of the U.S. economy; today, it’s just about 10%. This erosion of the industrial base has economically sidelined entire regions (“Rust Belt”) – areas that were key to Trump’s 2024 victory. Furthermore, the U.S. industrial capacity is far behind that of China, which could become a vulnerability in times of crisis or war. Trump’s team wants to reindustrialize the U.S. while also preserving the U.S. dollar’s dominance as the world’s reserve currency. Many economists deem this combination impossible (a strong industry normally requires a weaker currency, which contradicts the dollar-reserve privilege). However, Trump’s advisors believe the impossible can be achieved. Their master plan consists of three steps, which we will now examine in detail.

Trump’s Three-Phase Plan: From Tariff Chaos to the “Mar-a-Lago Accord”

Trump’s economic agenda can be broken down into three phases that build on each other to create a new U.S.-centered global economic framework:

Phase 1: Tariff Chaos as a Negotiation Tool

In this initial phase, the administration imposes high protectionist tariffs on both friends and foes alike. This “tariff chaos” signals that Trump is serious: He’s willing to take short-term economic pain (e.g., stock market turbulence or more expensive imports) to force other countries to the negotiating table. Bassett confirmed that Trump is now using tariffs as a deliberate tool in negotiations – even with traditional partners. Stephen Miran emphasized before taking office that the dollar reshaping could only occur after a phase of high tariffs, once enough negotiating power had been built. In other words, the current conflicts are intentionally sparked to secure better deals later. Trump demonstrates maximum toughness (“America First”) to push countries out of their comfort zones.

Phase 2: Reciprocal Tariffs – “Level Playing Field”

Next, Trump’s team seeks reciprocity in trade relations. Reciprocal tariffs mean that the U.S. would apply exactly the same tariff rates as any country imposes on U.S. goods. This is meant to eliminate long-standing trade imbalances. Under the WTO, many countries were allowed to impose higher tariffs on U.S. goods than the U.S. did on theirs. From now on, it will be “equal treatment for all.” If Country X raises its duties, the U.S. immediately responds in kind – making a tariff arms race pointless. The goal is a level playing field where competitiveness and the rule of law matter, not low wages, currency manipulation, or intellectual property theft. Critics warn that such extensive trade wars historically hurt all sides (e.g., the 1930s) and stoked political tensions, potentially escalating to conflict. Trump’s advisors counter that the U.S. holds the upper hand: since nearly every country depends on the U.S. market, they cannot afford to indefinitely retaliate. Indeed, China sidestepped Trump’s first round of tariffs in 2018 by rerouting its exports through third-party countries (e.g., Mexico, Vietnam). This time, however, global tariffs are being introduced to close such loopholes. The message is clear: no country can escape U.S. pressure – in the end, they will have to agree to a deal that creates fairer conditions.

Phase 3: A New Currency Agreement (“Mar-a-Lago Accord”)

Once Trump has applied enough pressure, a major diplomatic breakthrough is expected – an international currency and trade agreement, humorously dubbed the “Mar-a-Lago Accord.” In reference to the historical agreements of Bretton Woods (1944) and the Plaza Accord (1985), Trump’s team envisions a pact that deliberately devalues the U.S. dollar without losing its reserve currency status. Specifically, allied “green” countries could peg their currencies to the dollar and revalue them when the dollar becomes too strong. Through this coordinated management, the dollar would remain weaker, U.S. products would be cheaper internationally, and chronic U.S. trade deficits would shrink. In return, partner countries would get preferential access to the massive U.S. consumer market, U.S. financial infrastructure (dollar liquidity), and U.S. security guarantees – much like the old Bretton Woods system. However, they would also be required to “pay tribute,” for example, by contributing to the costs of U.S. military protection, thus reducing them to something akin to vassal states, as one analyst soberly notes. Officially, the government has yet to announce such a scenario – Miran is keeping details vague to avoid preempting negotiations. But the direction is clear: weaken the dollar but keep it. In short, the aim is to achieve the best of both worlds: the competitiveness of a weaker currency while maintaining the privilege of being the world’s reserve currency.

Interaction of the Phases

Phase 1 (Tariff Shock) creates the necessary bargaining power, Phase 2 (Reciprocity) institutionalizes fairer trade rules, and Phase 3 crowns the whole process with a new currency system that supports both U.S. industry and hegemony. Bassett emphasizes that trade, currency, and security must be considered in tandem – which is exactly what Trump is doing by restructuring the international order in the interest of the American people. However, it all depends on whether enough countries are willing to join this new system. Here lies the greatest uncertainty: Can Trump create enough trust and incentives to get other nations to voluntarily align with this U.S.-centered system?

Historical Context: From Bretton Woods to the Neoliberal System

Trump’s strategy follows in the tradition of previous major restructurings of the global economy by the U.S. In fact, Washington has fundamentally reshaped the global framework twice before: after World War II with the Bretton Woods system and in the 1980s with the neoliberal world order of free trade and flexible markets. To understand the current situation, it’s worth looking at these precedents:

• Bretton Woods (c. 1944–1973): At the Bretton Woods Conference in 1944, the Allies, under U.S. leadership, created a rules-based financial system. For all countries except the U.S., participation essentially meant three things:

  • Pegging their currency to the U.S. dollar, which in turn was tied to gold (fixed exchange rate).

  • Security guarantees from the U.S. – many countries joined military alliances like NATO and stationed U.S. troops to secure protection from the Soviet threat.

  • Economic aid and market access: The U.S. generously opened its domestic market to the exports of its partners and supported their reconstruction (e.g., Marshall Plan aid). In return, these countries were allowed to temporarily protect their own markets from U.S. competition until their industries became competitive.

Only allied (green) countries enjoyed all these benefits. Neutral countries could make individual agreements, but they did not receive the full package. Communist countries (then “red”) were practically excluded from the West-dominated economic order. At first glance, Bretton Woods seems like a better deal for the partners than for the U.S. – after all, the United States allowed others to build their industries with protection. But the U.S. pursued smart self-interests: They wanted to prevent another global economic crisis and new world wars at any cost. Prosperity in Europe and Japan was meant to deprive communist ideology of fertile ground and create reliable Cold War allies. Moreover, U.S. exporters also benefited from the Allied recovery. The most important outcome, however, was that Bretton Woods made the U.S. dollar the undisputed reserve currency. Through its role as a global reserve currency, the U.S. enjoyed what French finance minister Valéry Giscard d’Estaing once called the “exorbitant privilege.” Countries held massive dollar reserves, which allowed the U.S. to live beyond its means, meaning it could import more and spend dollars more than it exported – without immediately running into a currency crisis. This privilege, however, had a downside: the Triffin Dilemma. Because the global economy demanded more and more dollars as reserves, the U.S. Federal Reserve had to either massively expand the dollar supply (thus undermining the gold promise) or limit the dollar supply (which would slow global trade). In the 1960s, international demand for dollars grew so much that the system started to falter. In 1971, President Nixon pulled the emergency brake and ended the dollar-gold peg (“Nixon Shock”). The Bretton Woods system eventually collapsed, leading to severe currency turmoil and economic crises in the 1970s.

• Neoliberal World Order (c. 1980s–2016): Starting in the 1980s, the U.S., led by Reagan and Britain’s Margaret Thatcher, established a more flexible, market-oriented system. Its core pillars were: lowering tariffs, liberalizing capital flows, flexible exchange rates, and expanding U.S. security guarantees to formerly neutral countries. Unlike Bretton Woods, there was no formal agreement to follow the dollar; however, most countries voluntarily chose it as a stability anchor. Through the new World Trade Organization (WTO), almost every state that “played by the rules” gained access to the attractive U.S. market and the dollar financial system. In exchange, the dollar remained the dominant reserve currency, and the U.S. retained control over the global financial system. Through freely floating exchange rates, the dollar privilege was even further reinforced: Capital flowed into the “safe haven” U.S., driving the dollar’s value often above its trade-balanced level. The result was a very strong dollar, which gave Americans cheap imports and high purchasing power – and made financing a worldwide U.S. military presence easier. The downside: A strong dollar put U.S. industry at a disadvantage. Manufacturing jobs moved to countries with lower wages. Particularly after China’s rise as the “workshop of the world,” the American industry was hit hard, and many factories closed. Although the U.S. economy continued to grow (driven by services and technology), income inequality increased – well-off Americans benefited from the strong dollar and cheap consumer goods, while industrial workers lost their jobs. The social and regional divide widened. These developments politically paved the way for Trump’s protectionist agenda: In 2016, he won the election with the promise of renegotiating free trade and reviving the industrial heart of America.

• 2016–2020: First Break with Free Trade. Trump’s first term marked the official end of neoliberal trade policy. With the 2018/19 trade war, a U.S. president broke away from the dogma that free trade was always good. Trump imposed tariffs primarily on China to reduce the huge trade deficit and bring factories back to the U.S. However, China countered with retaliatory measures, and in the end, both sides had tariffs in place, with China still applying higher average tariffs than Washington. The hoped-for reindustrialization did not materialize; U.S. imports simply shifted to other Asian countries. Meanwhile, China’s high-tech industry continued to grow (e.g., electric vehicle production), challenging American and European industries. President Biden then tried a different path starting in 2021: massive industrial subsidies (e.g., for semiconductors and e-mobility) were supposed to lure manufacturing back. New plants did indeed emerge in the U.S., but at the cost of enormous state expenditures and deficits. Bassett and Miran criticized that this policy was not sustainable – they instead believe in using trade policy levers and currency adjustments to tackle the problem at its root.

Given this background, Trump’s new three-phase plan appears to be an attempt at a third major reshaping of the global order. Similar to 1944 and 1985, trade and currencies are to be realigned to make the system more favorable to the U.S. However, there is a key difference: The trust of partners in the reliability of the U.S. is now shaken. In the 1940s, America was seen as the guarantor of stability and reconstruction—many countries thus joined Bretton Woods. In the 1980s, while the U.S. was tough in negotiations (Plaza Accord, pressure on Japan/EU for currency appreciation), it operated within a fundamentally cooperative framework. By 2025, however, mistrust reigns: The U.S. has recently unilaterally abandoned agreements (such as the North American Free Trade Agreement NAFTA/USMCA) and even used tariffs to hit long-standing allies. In the heat of the moment, Trump has verbally insulted allies as well—he stated, for example, that friendly nations had taken advantage of the U.S. more than adversarial ones. Such signals raise doubts about whether the new U.S. strategy is based on fair partnership or simply on extortion. Historical experience shows that a stable global economic order requires a minimum of mutual trust. This is where Trump’s plan could encounter its biggest hurdle.

Evaluation of the Strategy: Current Data, Reactions, and Prospects

The MAGA strategy (Make America Great Again) is undoubtedly ambitious. But how realistic are its assumptions and goals? Below, we examine key points factually and look at initial reactions from important players:

Can the U.S. Dollar be Weakened and Still Remain the Reserve Currency?

A core goal of Trump’s plan is to devalue the U.S. dollar to make American exports more competitive—without giving up the advantages of dollar dominance. Historically, this seems like a paradox, because a reserve currency earns its credibility precisely because of its stability and strength. A deliberate weakening could undermine trust. Nevertheless, there are precedents: In 1985, for example, the U.S., Japan, and Germany agreed under the Plaza Accord to let the overvalued dollar fall in a controlled manner. The U.S. currency lost about 50% of its value against the yen and the mark in two years, yet retained its status as the global reserve currency. Trump’s advisors see this as evidence that coordinated devaluation is possible. In fact, they claim the U.S. could “have its cake and eat it too”—achieving both reindustrialization and the privilege of a reserve currency at the same time.

But the conditions today are more complicated than in the 1980s. Firstly, the global economy is more fragmented: New economic powers like China have their own ambitions and currencies. Secondly, after decades of globalization, countless players hold dollar reserves—ranging from central banks to oil corporations to developing countries with dollar-denominated debt. A severe loss of confidence in the dollar could trigger a chain reaction (capital flight, interest rate shocks). On the other hand, current data shows that the dollar has not lost its primacy. According to a study by the Atlantic Council, the U.S. dollar remained the most important reserve currency in 2024—neither the euro nor the BRICS countries could significantly reduce global dollar demand. By the end of 2024, central banks held nearly 58% of their currency reserves in U.S. dollars, far more than in euros (~20%) or yen (~5%). This dominance grants the U.S. enormous financial power: U.S. Treasury bonds are considered a safe haven, allowing Washington to finance high deficits relatively cheaply.

Trump is betting that cooperative devaluation will not destroy trust because all involved countries have a shared interest in more sustainable trade balances. Still, economists warn that it is uncertain whether the strategy will succeed. Similar attempts should be harder today—the global financial landscape is more complex and interconnected, which means unforeseen side effects are more likely. Should Trump act unilaterally to manipulate the dollar (e.g., through punitive taxes on dollar users, as Miran once suggested), investors may flee. Even the discussion about politically motivated dollar devaluation could motivate other major powers to diversify their reserves more—such as buying more gold (China, Russia, and even India have increased their gold holdings in recent years). It’s also important to note that the dollar’s value depends not only on the White House but also on U.S. economic and monetary policy. In 2024, the Federal Reserve raised interest rates, which temporarily strengthened the dollar; however, in early 2025, the dollar index dropped by about 4% as markets priced in the new trade conflicts. These fluctuations show how sensitive the currency is to economic data.

A cautious dollar devaluation with international coordination (similar to the Mar-a-Lago Accord) appears theoretically possible if enough partners participate. The dollar would remain the reserve currency as long as no attractive alternative emerges—and none is currently visible. However, this balancing act is risky. If trust in the Fed’s leadership or the solidity of U.S. finances wanes, the pendulum could swing the other way. Yet, for now, the “Greenback” remains the unchallenged backbone of the global financial system, and Trump knows he must keep this ace up his sleeve.

Reactions from China and India: Confrontation vs. Cooperation

The immediate reactions of the two Asian powers—China and India—toward Trump’s new direction are very different, reflecting their strategic calculations.

China responds negatively and confrontationally. Trump’s first tariff offensive was met by Beijing with retaliatory tariffs. When Washington announced sweeping punitive tariffs in April 2025 (averaging 54% on Chinese goods), China immediately countered with its own tariffs of initially 34% on U.S. imports. This rate could rise further—reports suggest Beijing is considering increases up to 84% or even triple-digit rates to exert maximum pressure. However, since China exports much more to the U.S. than vice versa, it cannot conduct a symmetrical trade war. Beijing, therefore, focuses its countermeasures strategically: it targets U.S. industries that affect Trump’s political base—such as agricultural products from Republican strongholds. At the same time, China is working to develop alternative export markets and promote regional economic integration to reduce its dependence on the U.S. market. It is advancing trade agreements in the Asia-Pacific region (such as RCEP) and investing in its Belt and Road Initiative to create new sales routes to Europe, Africa, and Latin America. In currency policy, Beijing is also trying to reduce the U.S.’s influence: Since the global financial crisis of 2008, China has gradually internationalized the renminbi—having signed swap agreements with dozens of countries to facilitate trade settlements in yuan. However, the yuan’s success remains limited: its share of global payment flows and reserves is still small (2–3%). Nonetheless, China is working with partners (e.g., Russia) on alternatives to the dollar-based payment system (e.g., BRICS cooperation). Overall, it is clear: China has no interest in joining the U.S.-centric system outlined by Trump. Instead, it is trying to form a counterpower—or at least gain as much autonomy as possible. Official statements from Beijing and Moscow condemn U.S. tariff policy as a “danger to the global economy” and warn that America could cut off its own nose to spite its face. When Trump recently openly threatened the BRICS countries with 100% tariffs if they advanced a common reserve currency, Russia countered that such coercion would “backfire.” China itself, as it did in the first trade war, is likely to focus on endurance in the long term. President Xi Jinping has internally signaled that they will never back down, even if it means enduring difficult years. This stance is reinforced by a mix of countermeasures and demonstrative strength (e.g., military maneuvers to apply pressure on the U.S. on other fronts).

India, on the other hand, is taking a nearly opposite course. New Delhi sees Trump’s policy less as a threat and more as an opportunity. India’s export economy has not yet penetrated the U.S. market as strongly as China’s—partly due to India’s own reluctance toward free trade agreements. However, now that Chinese and Vietnamese suppliers are hit with massive U.S. tariffs (54% and 46% respectively), Indian products (26% U.S. tariff) have suddenly become relatively more competitive. India wants to seize this gap. Prime Minister Narendra Modi met with Trump in February 2025 in Washington; both countries announced they would work quickly on a bilateral trade agreement. Early rounds of negotiations were already held in the spring (Indian ministers in Washington and U.S. emissaries in Delhi). The goal is to liberalize certain sectors in a “first chapter” to improve India’s access to the U.S. market—ideally before Trump visits India in the fall. Additionally, the U.S. and India are maintaining a strategic technology alliance. Already under Biden, the iCET initiative (Critical and Emerging Technologies) was launched in 2023 to kickstart joint projects in AI, semiconductors, defense, and space. While Trump has dismantled many of Biden’s programs, he has continued iCET in an adapted form as “TRUST” (Transforming the Relationship Using Strategic Technologies). This signals that Washington views India as a key partner in the technological and geopolitical competition with China. India’s government, in turn, is keen to maintain a positive relationship with the U.S.—especially because China is viewed as a neighbor and rival. Foreign Minister Subrahmanyam Jaishankar recently clarified that India has “absolutely no interest in undermining the role of the U.S. dollar”; instead, they see the dollar as a stabilizing factor in the world economy. This statement—remarkable for a BRICS member—highlights India’s pragmatic approach. New Delhi wants to benefit from the U.S. market and capital while maintaining its strategic autonomy by staying in conversation with other powers (including China). For instance, while India has cooled toward the idea of a BRICS common currency, it is actively participating in efforts to facilitate trade in local currencies (e.g., rupee-ruble payments for Russian oil). Overall, India positions itself in the “yellow” category with a strong tendency toward “green”: It wants to become a preferred partner of the U.S. without burning bridges to Eurasia. For Trump, India is an ideal candidate in the new system—a large democracy, economically emerging, anti-China, and willing to accept dollar hegemony.

Who Will Join the New System – and Who Won’t? (Green, Yellow, Red)

Whether Trump’s vision of a green-yellow-red system becomes a reality depends on how other countries respond. Early signs point to a divided world: Some are ready to cooperate (albeit reluctantly), while others are seeking alternatives.

The following table summarizes the three country categories and their possible characteristics in the new system:

Examples: In Trump’s concept, traditional allies like Canada, Western Europe, Japan, and South Korea would be considered green countries. Yellow could include many developing or non-aligned countries that are neither closely allied nor explicitly hostile (such as Southeast Asia, Latin America, and possibly the Gulf states). Red would primarily include China, but also likely Russia, Iran, and other nations viewed as adversaries.

Current Trends: Many traditional U.S. allies are uncertain but are (still) not ready to change sides. In the EU, for example, there is internal disagreement about how to respond to Trump’s tariffs. The European Commission has spoken of the necessity to strike back, but key countries like Germany and France—already preoccupied with their own political problems—prefer a more cautious, de-escalating approach for now. Rather than immediately imposing retaliatory tariffs, they aim to negotiate lower tariffs or exemptions for critical sectors. At the same time, it is emphasized that countermeasures will be considered if Washington does not back down. This cautious stance suggests that Europe generally wants to stay aligned with the U.S. (also due to security dependencies), but is reluctant to accept the role of a compliant “green” vassal. In particular, the idea of paying “tribute” for U.S. protection or steering their own currency according to Washington’s wishes raises resistance—many Europeans find this reminiscent of imbalanced power dynamics from past eras. However, the economic reality may force the EU to make compromises: Europe exports a lot to the U.S. and wants to avoid a trade war at all costs. Therefore, targeted concessions are conceivable—such as stronger defense contributions (e.g., the NATO 2% GDP target) or agreements to regulate China (investment controls, technologies) in order to qualify as green, without explicitly labeling it as such.

Japan and South Korea find themselves in a similar situation. Both are entirely dependent on U.S. security (nuclear umbrellas against North Korea/China) and have previously accepted currency revaluations under U.S. pressure (Plaza/Louvre Accords). It is likely that Tokyo and Seoul would ultimately join the “Mar-a-Lago Accord” if it is framed in a multilateral context. However, in the short term, they too have faced tariffs and protested. Japan’s diplomacy is likely to seek special treatment—possibly through the QUAD Alliance (U.S.-Japan-India-Australia) or other channels, in order to gradually align with the green category without publicly losing face.

Canada and Mexico were a special case as direct neighbors: They were initially exempted from the blanket tariffs on April 2 (10% on almost all countries) because they are deeply integrated into U.S. supply chains under the new USMCA agreement. Trump, however, used other pressure tactics here—threatening separate 25% tariffs from February 2025 onward to push Mexico into drug control efforts. The message to Ottawa and Mexico City is clear: You can stay green, but only if you politically comply. Both countries are trying to address this offensively (Mexico, for example, is intensifying its fentanyl crackdown, while Canada lobbies Washington for exemptions). Given how closely their economies are intertwined with the U.S., they have little choice but to fit into the new system—but the hard-handed approach of the U.S. could stir domestic discontent and increase long-term anti-American sentiment.

On the other hand, a loose group of countries is forming that is not ready to accept Trump’s order. Russia is already isolated by Western sanctions and is moving closer to China—both declare a “limitless” partnership against the U.S.-dominated world. Iran and, to some extent, Turkey are also orienting themselves toward the East/BRICS. Surprisingly, even Brazil—a traditional U.S. partner—under President Lula has signaled that it wants to reduce the dominance of the dollar. When Brazil took over the chairmanship of the BRICS in 2025, it clarified, however, that it does not want to introduce a common currency (in order not to directly provoke Trump’s wrath) but is very interested in facilitating trade in local currencies. Alternative payment systems and digital technologies are being considered to become more globally independent of the dollar. Lula emphasized that this is “not aimed at anyone”—but the fact that major emerging countries are discussing such steps shows discomfort with U.S. centrality.

Many countries in the Global South feel caught between the fronts. Singapore’s prime minister even declared that the existing world order is “over,” and small countries will need to prepare for tough bilateral negotiations as rules and norms erode. Some of these countries may be tempted to turn toward Chinese influence if the U.S. treats them too harshly. Others remain silent, hoping that the great powers will not wage their rivalry on their backs.

In conclusion, there is currently no mass rush to Trump’s new club—but also no mass exodus from the U.S. camp. Rather, actors are sorting themselves along their interests: Those who depend heavily on the U.S. or can benefit (e.g., India) are seeking an arrangement; those who feel disadvantaged or threatened (China, Russia) are forming counterforces. In between, many are maneuvering to minimize disadvantages. The real test, however, is yet to come: Will Trump manage to negotiate a formal “Mar-a-Lago Accord,” and who would sign it? So far, this remains hypothetical. But the positions already reveal the tendencies: A potential currency and security pact would likely need to be carried by the U.S. and a core group of allies (Europe, Japan, Five Eyes). If they reach an agreement among themselves, the new system could gain enough momentum to draw in other, more neutral countries—perhaps through economic incentives. However, if even close partners like Germany or Japan refuse to follow suit, the “Bucket” system is likely to remain nothing more than a rough pressure tool without widespread acceptance.

Risks and Consequences of a Strategy Failure

What if Trump’s grand plan fails? This scenario is by no means excluded—it only takes enough countries not to play along. The potential economic and geopolitical consequences would be far-reaching:

• Continued Fragmentation of World Trade: If no new agreement is reached, the higher tariffs and countermeasures could remain in effect indefinitely. The world could split into trade blocs—one led by the U.S. and the other by China/BRICS, while many smaller countries get caught in between. The multilateral trade system (WTO) would become de facto obsolete. This development dangerously resembles the 1930s, when protectionism and block formation strangled the global economy. Initial analyses already compare Trump’s disruption to the global financial crisis of that time. A failure of his strategy could trigger a global recession, as supply chains would be disrupted and investment would decline due to uncertain trade conditions.

• Either Dollar Privilege or Industry – A Forced Choice: Without the Mar-a-Lago deal, Trump would face the dilemma he was trying to solve. Option 1: He sticks with the dollar as the reserve currency (e.g., by not undertaking radical devaluation actions). But this would also keep the dollar strong, and reindustrialization would hardly progress. The U.S. would have to continue living with high import surpluses, relying on rivals like Mexico, Vietnam, and Europe to supply their consumer goods. The power imbalance Trump complains about—America as a “service economy” vs. China as a “workshop”—would remain. Option 2: Trump decides to devalue the dollar significantly (e.g., through monetary policy or capital controls) to gain industrial advantages—though this risks causing the dollar to lose its reserve currency status. Without international agreement, major investors could lose confidence. If the U.S. dollar is no longer seen as reliable, central banks and funds would shift their reserves to the euro, gold, or other assets. The U.S. would lose its exorbitant privilege: It would have to earn its imports again and could no longer run unlimited deficits without the currency collapsing. Trump himself has described this scenario as catastrophic (“loss of reserve status = decline to the Third World”). But an uncoordinated weakening of the dollar could result in precisely that.

• Geopolitical Power Shift: If Trump’s initiative fails, it could shift the balance of power in the long term. If no West-led agreement is reached, countries like China would have free rein to strengthen their own initiatives. The BRICS states, for example, could intensify their cooperation—perhaps not creating a full-fledged replacement for the dollar, but regional financial structures that bypass the West. If the U.S. is seen as an unreliable partner, it could undermine traditional alliances. Some countries might emancipate themselves more in terms of security policy (e.g., Europe by building autonomous defense capabilities to avoid U.S. pressure). Others might move closer to China, which is offering alternative security and economic options. In the worst case, a world would emerge in which the U.S. remains economically and militarily strong, but more isolated than before— a hegemon without followers. This would also weaken America’s global enforcement ability, e.g., in sanctions or diplomacy, as fewer countries would be willing to follow U.S. directives.

• Domestic Economic Disruptions: It’s important to remember that if Trump ends up with empty hands (no deals, ongoing trade war), he would face a domestic problem. The initial victims (higher prices, export losses for farmers and industries, stock market losses) would not have paid off. The U.S. economy could slip into stagflation: high inflation from tariffs but stagnant industrial production due to a lack of new markets. This would hit Trump’s base (the Rust Belt) hard and generate political headwinds. Protests and dissatisfaction could rise—early demonstrations against the government’s policies have already taken place. The deep polarization of U.S. society could intensify, especially if Trump blames “disloyal” elites or foreign scapegoats for the failure.

In conclusion, the Trump administration would face an uncomfortable choice: Either it sticks with the status quo (the dollar remains strong, industry stays weak)—which contradicts the campaign promise of “Make America Manufacturing Great Again”—or it breaks the status quo (sacrifices the strong dollar) and risks America’s global financial advantage. Both options would be a step backward from the ambitious goal of having both. This very possibility was highlighted by Miran earlier—yet without international cooperation, it boils down to the classic dilemma.

Realism and Potential Impacts on Trade, the Dollar, and Geopolitics

Donald Trump’s three-phase economic strategy represents the boldest attempt in decades to rewrite the rules of global trade. It stems from a diagnosis shared by many parts of the U.S. population: the global order of the past 40 years has led to the shrinking of America’s industry and the rise of rivals. Bassett and Miran’s plan aims to reverse this trend while also preserving America’s financial advantage (the dollar)—a Herculean task that divides opinions.

Is the strategy realistic? Only to some extent. Historically, the creation of a new system (Bretton Woods) or its adjustment (Plaza Accord) was only possible under special circumstances—namely with the U.S. in the leading role, but also in agreement with key partners. However, in 2025, the U.S. appears politically erratic and less trustworthy than in previous eras. Many countries doubt the consistency of American commitments over election cycles. Trump’s hardline approach—first creating chaos, then calling for order—may force successes at the negotiation table, but it lacks the goodwill needed for long-term alliances.

Still, one shouldn’t dismiss the plan as “crazy” too quickly. It is logically structured and based on concrete historical analyses and economic theories. If Trump can bring certain countries on board (e.g., India, some G7 partners) and at least achieve an informal agreement on currency coordination, partial successes could indeed follow: The dollar would moderately devalue, U.S. exports would rise, and some industrial sectors could return. Globally, we would likely see the formation of trade blocs: on one side, a U.S.-led alliance with intense trade, currency, and security integration (green club), and on the other side, a China-influenced circle with many non-aligned countries maneuvering between the two. Global trade would then operate less on a general multilateral basis, but rather be channeled more through bilateral pacts and agreements—a step back from liberal globalization, but potentially more stable than total chaos. The U.S. dollar would remain the reserve currency for the foreseeable future, though parallel financial spheres could emerge: a dollar zone and a yuan/BRICS zone with limited interfaces. Geopolitically, the new system could solidify America’s hegemony if enough nations participate—it would essentially be a form of neo-imperialism where the U.S. offers protection and markets in exchange for loyalty and economic concessions. This would cement the existing power structures, albeit at the cost of some openness and sovereignty for the partners.

However, if Trump fails to mobilize sufficient support, a less orderly outcome is likely: endless trade wars, a weakened World Trade Organization, and a nervous coexistence of different currency blocs—in short, uncertainty as the new normal. This would dampen global growth and harm everyone, including the U.S. Ironically, in such a scenario, Trump might achieve exactly what he wanted to avoid: countries diversifying away from the dollar, forming regional alliances out of distrust toward Washington, and making the U.S. less influential in the long term.

At this moment, the future of the plan remains open. What is certain is that the coming months and years will be shaped by intense negotiations—both at official conference tables and behind the scenes. Compromises will be made, red lines tested, and new alliances formed (or old ones dissolved). From a neutral, analytical perspective, it is important to note that extreme scenarios rarely play out fully. Neither a complete triumph for Trump (with dollar stagnation but still dollar hegemony) nor a complete failure (U.S. loses everything) are predetermined. More likely are intermediate results: certain realignments in trade, slight adjustments in currency relations, but also ongoing rivalries. For global trade, this could mean that in the short term, it becomes bumpier—with more tariffs, controls, and political interference—but in the medium term, new balances might be found, such as through regional agreements replacing global rules. The role of the U.S. dollar is likely to remain large for the foreseeable future, even if it loses some value; the institutional and market networks surrounding the greenback are too strong. However, its dominance could gradually erode if trust is broken and alternatives mature (e.g., the euro, yuan, digital currencies). Geopolitical power dynamics will ultimately realign depending on the outcome: A successful Trump deal would rehabilitate the U.S. as an economic order power, while a failure would likely make the world more multipolar and unpredictable.

As an observer, one should soberly note: Trump’s strategy is a high-risk game that, if successful, could open a new chapter of U.S. hegemony—but in failure, it would undermine America’s position and global stability. The next few years will show whether the “tariff chaos” and the vision of a Mar-a-Lago Agreement will lead to a sustainable new order or go down in history as an ambitious failure. In any case, the discussion has already achieved one thing: It has brought questions of fair trade rules, currency imbalances, and global economic governance back to the forefront of the global debate—issues that are more important than ever in a globalized, yet increasingly competitive world order.