Trump 2nd Term Treasury Secretary Nominee Lighthizer Leads
"Dollar Overvaluation Is Cause of US Trade Deficit" Claim
Former U.S. President Donald Trump's economic advisers are reportedly planning to devalue the U.S. dollar with the launch of a second Trump administration, according to the American political media outlet Politico on the 15th (local time).
According to the report citing three former Trump administration officials, economic advisers in the Trump camp, led by Robert Lighthizer, former U.S. Trade Representative (USTR), are pushing this plan. Lighthizer, who designed the U.S. tariffs on China during the Trump administration, is also mentioned as a candidate for Treasury Secretary in a second Trump term.
The intention behind this plan is interpreted as an effort to resolve the U.S. trade deficit. In his book No Trade Is Free, Lighthizer argued that "the persistent trade deficit is one of the major problems of the U.S. economy," pointing to an overvalued dollar as the cause. The logic is that if the dollar's value falls, U.S. exports will gain price competitiveness, which could improve the trade deficit.
A former Trump administration official explained, "Some individuals who could form the second Trump administration point to the overvalued dollar as the cause of the U.S. trade deficit, so it is highly likely that exchange rate revaluation will be a policy priority."
However, this policy is expected to face considerable opposition. The rise in import prices due to a weaker dollar could burden consumers, and there is a possibility of retaliation through exchange rate manipulation by trading partners. Additionally, the value of dollar-denominated assets held by U.S. investors could decline, likely provoking strong resistance from Wall Street.
Lighthizer frequently advocated for dollar devaluation during Trump's first term but reportedly faced opposition from pro-Wall Street officials such as then-Treasury Secretary Steven Mnuchin and then-White House National Economic Council Director Gary Cohn. It is even said that former President Trump himself dismissed the dollar devaluation proposal from Peter Navarro, then-White House Director of Trade and Manufacturing Policy, who was known as Trump's "economic strategist."
Politico, citing sources, stated, "The details of the exchange rate policy have not been finalized and could change before and after the election," but added, "If Trump returns to the White House and Lighthizer assumes the Treasury Secretary position as planned, his goal will be to recreate the 'Plaza Accord.'" The Plaza Accord was an agreement in 1985 where the U.S., suffering from fiscal and trade deficits, coordinated with Japan, France, Germany, and the United Kingdom to induce a decline in the value of the U.S. dollar. It is credited with successfully curbing Japan, which was then recording a massive trade surplus with the U.S.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
