Are Trump trade advisers plotting a dollar devaluation?

“Advisers close to the former president — particularly his former trade chief Robert Lighthizer — are considering policies that would weaken the dollar relative to other currencies, which could juice U.S. exports but also fuel inflation.

Economic advisers close to former President Donald Trump are actively debating ways to devalue the U.S. dollar if he’s elected to a second term — a dramatic move that could boost U.S. exports but also reignite inflation and threaten the dollar’s position as the world’s dominant currency.

The idea is being discussed by former trade chief Robert Lighthizer — a potential Treasury secretary pick for Trump and the architect of the former president’s bruising tariff campaign against China — and policy advisers allied with him, according to three former Trump administration officials granted anonymity to discuss confidential policy plans.

Purposely devaluing the U.S. dollar by pressing other countries to alter their own currency values would represent the most aggressive proposal yet in Trump’s attempts to reshape global trade. The potential moves would go beyond the tariffs of Trump’s first term and the expansive industrial subsidies for clean energy enacted by President Joe Biden. A weaker dollar would make U.S. exports cheaper on the world market and potentially reduce the U.S.’ yawning trade deficit.

“Currency revaluation is likely to be a priority for some members of a potential second Trump administration, mainly because of the viewpoint that [an overvalued dollar] contributes to the trade deficit,” said one former Trump administration official, adding that Lighthizer and his team are the primary advocates for the approach.

But weakening the dollar could have other far-reaching consequences, from sending consumer prices for imported products soaring, to inviting retaliation from other countries and threatening the dollar’s role as world reserve currency, which would undermine U.S. sanctions on adversaries like Iran and Russia.

The potential policy shift during a second Trump term could further fragment the global economy — a post-pandemic trend top finance officials are already grappling with as they gather in Washington this week for the yearly Spring Meetings of the International Monetary Fund and World Bank.

Each of the former officials stressed that all of the “nuances” of the currency policies are not worked out yet, and could shift before or after the election. Among other things, Lighthizer is considering ways to weaken the dollar unilaterally or through negotiations with foreign nations using the threat of tariffs, the former officials said.

Lighthizer — one of the few Cabinet members to survive Trump’s full first term — retains significant influence on the former president’s trade and economic policies from his post as the trade chief at the America First Policy Institute, a think tank set up to devise policies for a second Trump administration.”