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William Watts: Why a 1985 deal to weaken the dollar offers a map to ending the trade war

Section: Daily Dispatches

By William Watts, New York
Thursday, August 8, 2019

The fear that a deepening trade war could wreck the global economy has analysts and economists once again pining for the mid-1980s, when the U.S. and the world's other major economic powers struck a deal, known as the Plaza Accord, to weaken the dollar.

An end to the present turmoil surrounding U.S.-China trade tensions "may require no less than a global grand bargain," wrote Thierry Wizman, economist at Macquarie Group, in a Wednesday note. The best such grand bargain would see President Trump "ditching the protectionist mindset" versus China, he said. In return, China, the European Union, and Japan would agree to a depreciation of the U.S. dollar, which on a trade-weighted basis stands near a three-year high. ...

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