A repeat of the 1985 Plaza Accord to weaken the U.S. dollar is unlikely, as it would require the cooperation of both China and the EU, said Naoyuki Shinohara, Japan’s former top currency diplomat.
Speculation suggests the Trump administration might pursue a so-called "Mar-a-Lago Accord" to address the U.S. trade deficit by weakening the dollar. But unlike in 1985, when the U.S. worked mainly with Japan and Germany, today’s global market demands broader coordination.
Trump’s strained relations with China and Europe due to his tariffs make such cooperation difficult, Shinohara said. "You need China and European nations on board, which is very hard right now," he said, adding that currency intervention is also less effective in today’s massive markets.
Shinohara, who played a key role in global financial crisis talks in 2008, warned that Trump's unpredictable tariff moves create uncertainty and volatility for investors.
Japan, heavily reliant on U.S. exports—especially cars—could suffer significant economic damage if U.S. demand slows. Shinohara emphasized the need for Japan to diversify beyond the U.S. market.
He also noted that while a weak yen hurts consumers by raising import costs, a sudden yen surge could damage exports and trigger demands for government action.
Regarding the Bank of Japan, Shinohara advised continuing gradual rate hikes, but cautioned that high market volatility makes such moves risky for now.