Following the latest wave of U.S. tariffs, analysts are speculating about what levers Donald Trump might pull next to force trade partners into accepting terms favorable to Washington. As Reuters reports, the next moves by the former president could strike much deeper—targeting access to the dollar and international payment systems. These steps could fracture alliances and destabilize global financial markets.
The Dollar as a Weapon
As the center of the global financial system and issuer of the world’s reserve currency, the United States possesses unique tools of leverage. If tariffs fail to reduce the trade deficit, Trump may resort to radical measures—cutting off dollar liquidity to foreign banks or even blocking support from the Federal Reserve.
“I could well imagine that Mr. Trump…grows frustrated and he does try to implement wacky ideas, even if the logic for them is not there,” said Barry Eichengreen, professor of economics and political science at the University of California, Berkeley.
Such scenarios may seem far-fetched, but many economists warn they should not be ruled out. This is especially true if tariffs do not lead to a decrease in the U.S. trade deficit—an outcome many see as likely, given near-full employment and a resulting labor shortage.
The Mar-a-Lago Accord: A Coordinated Dollar Push?
One of Trump’s potential next moves could be to engineer a weaker dollar through an international agreement. In a November policy paper by Stephen Miran, Trump’s pick for the Council of Economic Advisers, the idea of a so-called “Mar-a-Lago Accord” is floated—an allusion to the 1985 Plaza Accord and Trump’s Florida resort.
Miran suggested the U.S. might use tariff threats and security guarantees to convince other nations to revalue their currencies against the dollar and offer other concessions.
But economists are doubtful this kind of deal could gain traction in today’s environment.
“I think that’s a really unlikely scenario,” said Maurice Obstfeld, senior fellow at the Peterson Institute for International Economics.
He noted that tariffs have already been imposed, weakening their value as a threat, and the U.S. commitment to global security has been eroded by its ambiguous stance on Ukraine. Furthermore, central banks in the eurozone, Japan, and Britain are unlikely to agree to a deal that would force them to raise interest rates and risk recession.
TS Lombard chief economist Freya Beamish added that pushing for a stronger yuan would contradict China’s current efforts to reflate its struggling economy. Even Japan, where authorities have frequently intervened in currency markets to support the yen, is unlikely to welcome a sharp appreciation due to lingering fears of deflation.
Cutting Off Dollar Lifelines
If diplomatic options fail, Trump might turn to more aggressive strategies. One such measure could involve restricting access to the Federal Reserve’s dollar swap lines—critical instruments that allow foreign central banks to borrow dollars in exchange for collateral in their own currencies.
These swap lines serve as a vital safety net during times of crisis when money markets freeze and investors flee to dollar-denominated assets. Revoking this lifeline would disrupt the multi-trillion-dollar offshore dollar funding market and severely impact banks in the eurozone, Britain, and Japan.
Although control over these lines remains with the Fed and Trump has never explicitly sought to take over the institution, his recent moves to replace key personnel in regulatory agencies have raised concerns among experts.
“It is no longer inconceivable that in a bigger negotiation this could serve as a nuclear threat,” said Spyros Andreopoulos, founder of the consultancy Thin Ice Macroeconomics.
He warned that such tactics could, over time, erode the dollar’s status as a trustworthy global currency.
Payment Systems as a Pressure Point
Another powerful tool at Washington’s disposal is its dominance over global payment systems, particularly Visa and Mastercard. Although countries like China and Japan have developed their own systems, the two U.S. giants still handle two-thirds of all card transactions in the 20-nation eurozone.
U.S. tech companies like Apple and Google also control nearly 10% of the mobile payment market, making Europe increasingly dependent on American digital infrastructure.
The European payments market, valued at more than €113 trillion ($124.7 trillion) in the first half of last year, is largely shaped by U.S. firms. If Visa and Mastercard were to suspend services, as they did in Russia after the Ukraine invasion, European consumers would be forced to revert to cash or slow, manual bank transfers.
“That the U.S. has turned hostile is a huge setback,” said Maria Demertzis, chief economist for Europe at the Conference Board think tank.
The European Central Bank has acknowledged that this dependency exposes the continent to “economic pressure and coercion.” A digital euro is being considered as a potential solution, but the project has become bogged down in debates and may take years to implement.
Europe’s Dilemma: Retaliate or De-Escalate?
European leaders are actively debating possible responses to Trump’s potential financial pressure campaign. Options range from imposing reciprocal tariffs to more drastic steps like limiting U.S. banks’ access to EU markets. But acting on these threats may prove difficult given the global dominance of Wall Street and the risk of backlash against European banks operating in the U.S.
Still, according to Reuters, some international banking executives have privately expressed concern about possible retaliation from Europe in the months ahead.
A potential second Trump administration could mark a sharp turn in U.S. economic diplomacy. Beyond tariffs, Washington may weaponize the dollar, the Fed, and global payment networks to bend allies to its will. While such moves may seem extreme, more and more analysts believe that ignoring the possibility could leave the world dangerously unprepared.
This article was prepared based on materials published by Reuters. The author does not claim authorship of the original text but presents their interpretation of the content for informational purposes.
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