Donald Trump's so-called "Liberation Day" tariffs have caused chaos, up-ending stock markets and sending world leaders scrambling.
According to the Trump administration, more than 70 countries are lining up to try and negotiate their way out of the new levies of up to 49 per cent — which have mostly now been "paused".
"These countries are calling us up, kissing my ass," the US president told a Republican event this week in Washington.
Many have pre-emptively offered to cut their tariffs on US imports and start buying more American exports.
But Mr Trump and his advisers may have a much bigger prize in mind.
Some believe the tariffs are just the first step in a grand strategy to reshape global trade, boost US manufacturing, reduce the US budget deficit and make America's allies pay for the US security umbrella.
It's being called the Mar-a-Lago Accord.
It's never been confirmed by the Trump administration and is widely regarded by economists as a terrible idea that won't work.
But that doesn't necessarily mean that Mr Trump isn't going to try and make it happen.
What is the Mar-a-Lago Accord?
The details are complicated and involve a lot of finance theory.
Put simply, the plan is essentially to get other key economies to agree to pump up their own currencies and help devalue the US dollar.
This would hopefully achieve the US administration's stated goals of making goods produced in America more competitive and boost its manufacturing industry.
However, it would also make participants' exports less competitive.
The accord was outlined among a range of options in an essay last year by economist Stephen Miran, who has since been appointed chairperson of the US Council of Economic Advisers.
In the paper, Mr Miran argues the "overvaluation" of the US dollar is the reason for America's large trade deficit.
"Such overvaluation makes US exports less competitive, US imports cheaper, and handicaps American manufacturing," Mr Miran wrote.
The Mar-A-Lago Accord references Mr Trump's Florida resort Mar-a-Lago and the Plaza Accord of 1985 in which America's allies Germany, Japan, the UK and France agreed at New York's Plaza Hotel to jointly devalue the US dollar to boost America's industrial performance.
Mr Miran wrote that important economies such as China's and those in Europe would be less willing now to join a new accord, but tariffs could be a useful "stick".
"President Trump views tariffs as generating negotiating leverage for making deals," Mr Miran wrote.
"It is easier to imagine that after a series of punitive tariffs, trading partners like Europe and China become more receptive to some manner of currency accord in exchange for a reduction of tariffs."
He wrote that a currency accord with major economies could involve partner countries selling US dollar assets and swapping short-term US treasuries for century bonds.
US treasuries, or treasury bonds, pay interest over their term while century bonds don't and are only returned with an increased value once they mature after 50 or 100 years.
This could help finance the staggering costs of America's world-spanning military, he said.
Mr Miran said that under a currency accord plan, both tariffs and the threat of the US withdrawing security guarantees from countries involved in the deal would be used to ensure compliance with it.
He suggested that US security, trade and finance are joined, and that there was interest in getting countries to pay for America's security guarantees.
Mr Miran has described his paper as a "menu" of options, and said he wasn't advocating any particular option.
When asked by Bloomberg last month if some kind of currency accord was in the works, Mr Miran said Mr Trump was "very clear that he wants to start with tariffs".
"We are starting with tariffs," he said.
"Could a [currency pact] be something that is entertained down the road? Sure it could. But right now the president is focused on tariffs."
'A new economic golden age'
Comments from Mr Trump's team seem to hint it has something big planned.
Secretary of the Treasury Scott Bessent said during a Senate Finance Committee hearing in January that Mr Trump has a "generational opportunity to unleash a new economic golden age that will create more jobs, wealth and prosperity for all Americans".
"We can usher in a new, more balanced era of prosperity that will lift up all Americans and rebuild communities and families across the country," he added.
Peter Navarro, Mr Trump's senior counsellor for trade and manufacturing, has made it clear that other countries offering to lower their tariffs will not be enough.
"They're coming now and saying we want to talk, we'll lower our tariffs to zero if you lower your tariffs," he told Fox News this week. "That's not the problem. Vietnam is a great example."
"They sell us $15 for every one we sell them. Zero tariffs would get us no reduction in the $123 billion deficit we have."
Despite this, not everyone is convinced there's a strategy in the works.
David Henig, from the European Centre of International Political Economy, told the ABC there were a lot of people pushing their ideas for how the world economic system could change.
"None of them obviously to me have captured the attention of President Trump," Mr Henig said.
Mr Henig said while it wasn't impossible, it was hard to see the tariffs now "as a first step in some bigger strategy" toward a complex currency accord.
"I'm not sure there's enough skill and analytical capacity in the current White House to pull this [currency accord] off," he said.
"I think you would need some nifty footwork of the likes we haven't really seen from this administration … to get to a point where countries want to do deals with you like the really sophisticated Plaza Accord."
Why wouldn't the Mar-a-Lago Accord work?
In an opinion piece for the Lowy Interpreter, former chief economist at the Department of Foreign Affairs and Trade Jenny Gordon wrote that the ideas outlined by Mr Miran were unlikely to deliver the reduced deficits and bring back the good jobs that were the primary motivation.
Dr Gordon said the logic was flawed for a number of reasons including that:
- The US would need to borrow money to reinvest in its manufacturing sector, which would increase the value of the US dollar — the opposite of what the accord aims to do;
- Changing consumer patterns, technology and aging populations had done as much, if not more than global trade, to drive well-paying jobs out of America's industrial heartland; and
- The plan would see countries move away from the US dollar as the reserve currency, and Mr Trump has said he doesn't want that.
She concluded that countries were not likely to want to sign up to any deal because of Mr Trump's conduct.
"Trump's treatment of allies will hardly provide reassurance that complying with such an accord will buy stability. Even if quite a few countries do comply, it will not solve the US deficit problem," she said.
Lord Daniel Hannan, president of the Initiative for Free Trade and a member of the UK House of Lords, told the ABC Mr Trump's policy was "the most damaging policy and utterly needless".
"It's completely self-inflicted," Lord Hannan said.
"If you did think that manufacturing deficits were a problem this is not how you would go about fixing it.
"It's not possible to simultaneously to tackle the deficit problem and to keep a devalued US dollar as the world's currency."
He said countries around the world wouldn't agree to things that weren't in their economic interest because the US wanted them to.
"The people who are claiming that there is some clever nine-dimensional chess going on here are deluding themselves because they don't want to face up to the banal reality that this is a needless policy that will impoverish people."
In his essay, Mr Miran said that the US needed to offer incentives for trading partners to come on board with the currency accord.
So far, Mr Trump has used tariffs only as a bargaining tool to reduce import levies on US goods abroad and raise revenue at home.
Japan first to negotiate US tariffs
Among the first countries Mr Trump's team has agreed to meet with is Japan.
The United States is Japan's biggest export destination, with roughly 28 per cent of the total comprised of automobile shipments.
Mr Trump's decision to slap a 25 per cent levy on auto imports, and a reciprocal 24 per cent tariff on other Japanese goods is expected to deal a huge blow to Japan's economy.
Some analysts predict the higher duties could knock up to 0.8 percentage points off economic growth.
Japan also depends on the US military for protection.
Unusually, US Treasury Secretary Scott Bessent is leading the negotiating team, posting on X that the US would "work to enact the President's vision for a new Golden Age of Global Trade".
Trade talks are usually led by the US trade representative.
Japan's former top currency diplomat, Naoyuki Shinohara, told Reuters any US attempt to secure a coordinated depreciation of the US dollar through a 1985 Plaza Accord-type deal likely wouldn't work, because it would require the consent of China and Europe.
Mr Shinohara said unlike the Plaza Accord, when the United States worked only with close allies, Washington would need to engage more countries — including the China and European Union — to weaken the dollar effectively in a globalised market.
"Currency intervention, even if coordinated among nations, has become less effective because markets have become so big," he said.
He added that Mr Trump's decision to impose levies on China and Europe would make it extremely difficult to gain their consent.
Both have responded with tariffs of their own, with the US and China involved in an escalating tit-for-tat battle.
"In times like now, you need China to be in the loop, as well as European nations. That would be quite hard under the current circumstances," Mr Shinohara told Reuters in an interview.
ABC/wires
