US President Donald Trump holds a chart as he delivers remarks on reciprocal tariffs during an event in the Rose Garden entitled “Make America Wealthy Again” at the White House in Washington, DC, on April 2, 2025.
BRENDAN SMIALOWSKI/AFP via Getty Images/AFP
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BRENDAN SMIALOWSKI/AFP via Getty Images/AFP
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Amid the dizzying trade actions President Trump has taken in recent days, it was easy to miss a remarkable speech the White House released by one of Trump’s top economic advisors, Stephen Miran. In that speech, Miran hinted that the White House might be working to establish a new kind of global economic order that goes beyond just higher tariffs.
As the White House has already made pretty clear, its economic goals include reducing or eliminating America’s trade deficits with foreign countries and boosting domestic manufacturing. Tariffs are one big tool for those goals. But the existing global economic system is built on more than just low tariffs and free trade. It’s built on a special role that the U.S. dollar plays in the global economy. The dollar is the “international reserve currency.” It’s the main currency the world uses to trade and save.
This special role for the dollar can be traced back to 1944. That’s when global financial leaders met at a fancy hotel in Bretton Woods, New Hampshire, and hammered out the details of a new global economic order that would take hold after World War II ended. (For more on the fascinating history of this, read this old Planet Money newsletter and listen to this Planet Money episode).
In this recent speech and previous writings, Miran has complained that — while this special status for the dollar gives benefits to the United States and the global economy — it also strengthens the dollar, making American exports more expensive and U.S. manufacturing less competitive. He has suggested that America basically needs another Bretton Woods-style meeting to reform the international economic system, which would include potentially helping the United States to devalue the dollar or getting the world to compensate the United States for the special role the dollar plays in it. He has dubbed this potential summit the “The Mar-A-Lago Accord.”
Some observers, including Stanford historian Jennifer Burns, believe this idea is actually a primary motivation for Trump’s aggressive tariff policy. That the White House wants to strengthen their hands in negotiations for a grand bargain that serves America’s economy.
Is the special global role for the dollar a privilege or burden?
The reserve currency status of the dollar offers many benefits to the United States. One big one is it gives the United States a financial weapon to sanction other countries, by, for example, cutting their banks off to the flow of dollars or seizing U.S. financial assets, like the U.S. did to Russia after it invaded Ukraine. Because the dollar is the international reserve currency, it’s the lifeblood of trade around the world — even trade that doesn’t involve the United States. Control over the dollar gives the U.S. government a superpower over the global economic system.
Another big benefit of this special role for the dollar is lower interest rates on U.S. debt. The global demand for dollars and dollar-backed assets has given the United States an advantage known as “the exorbitant privilege.” This demand has helped keep borrowing rates low for the U.S. government, but has also caused currency markets to be distorted. The value of the dollar is higher than it would be without this demand, making American exports more expensive for foreigners.
During times of economic stress, global investors tend to flock to safer assets like U.S. Treasury bonds, further strengthening the dollar. This has led to debates about whether the reserve currency status of the dollar is more of a burden than a privilege. Some argue that it benefits American consumers but harms American producers by contributing to trade deficits and the decline of the manufacturing sector.
Economist Barry Eichengreen disagrees with these arguments, calling them “nonsense.” He believes that the special role of the dollar in the international monetary system is a significant benefit for America. While some debate the size of this benefit, there is a consensus that America is better off with the dollar playing its exceptional role.
Even President Trump has emphasized the importance of the dollar’s reserve status, warning countries against trying to create alternative reserve currencies. He has threatened tariffs on countries that attempt to replace the dollar, highlighting the perceived importance of the dollar’s role in the global economy.
When it comes to international trade, using any currency other than the dollar could result in tariffs and a strained relationship with America, according to a Trump administration official. The potential consequences of shifting away from the dollar as an international reserve currency were highlighted by Miran and Vance, who emphasized the tradeoffs involved. The Trump administration is looking for a way to maintain the dollar’s status while minimizing the costs associated with it.
“The Mar-A-Lago Accord”
Miran has proposed a plan, known as the “Mar-A-Lago Accord,” which aims to renegotiate the terms of the global economic system. This strategy could allow the United States to devalue the dollar and enhance its manufacturing competitiveness, while also reducing the country’s debt burden. The proposal involves convening representatives from various countries to discuss and potentially reform the international economic landscape.
In a recent speech, Miran argued that the United States shoulders a significant burden by underwriting the global economy and providing security through its military. He suggested that other nations should contribute more towards these “public goods” provided by the United States. This could involve accepting tariffs on exports, increasing imports from America, investing in U.S. factories, or making direct financial contributions to the U.S. Treasury.
While the Trump administration’s approach to tariffs has been met with criticism and uncertainty, the U.S. dollar remains a dominant force in international trade. Despite concerns raised by scholars like Eichengreen about the dollar’s stability, its status as the world’s primary reserve currency persists. The recent market fluctuations and policy shifts have raised doubts about the future of the dollar’s role in the global economy.
Eichengreen expressed heightened concerns about the international economic order and the dollar’s position in it. The unpredictability of current policies and market reactions has added to the uncertainty surrounding the future of the dollar as the preferred currency for global transactions.
statement: The cat was chasing the mouse.
Rewritten statement: The mouse was being chased by the cat.
