Are Tariffs Part of Trump’s Plan to Weaken the Dollar?

My first car was a clunker… 

I was thrilled to have it. At 16, I would have cut holes in the floorboard and Fred Flintstoned it down the street if I had to. 

But my 1984 Pontiac Parisienne was falling apart. 

The paint was flaking. 

There was a loose wire behind the dashboard that caused the radio to go on the fritz. 

And a spring had ripped through the cushion of the driver’s seat. I had to dodge it when I got in or out of the car lest it tear a hole in the back of my pants. 

That car was only about nine years old when I started driving it. I’m not even sure it had 50,000 miles on it when it finally bit the dust. 

It wasn’t just my Pontiac – most American-made cars from that era just weren’t built well. 

Today, I drive a Honda Pilot SUV. And I don’t think I could kill it if I tried. 

As regular readers will know, I live part of the year in Lima, Peru, with my family. The thing takes an absolute beating in Lima traffic, navigating potholes you could get lost in. 

And it spends most of the time in a coastal climate with 90% humidity that naturally corrodes anything metal. 

But it just keeps on chugging along. 

Hondas are great cars, but they are hardly alone. 

Warranties of 50,000 to 100,000 miles are common today across automakers, domestic and foreign alike. 

The average age of a car on the road in 1995 was just 8.4 years. Today, it’s about 14 years. Cars are just better now. They’re built to last.

So, what changed? 

Why was my childhood car a monumental heap of junk while the modest car I drive today is virtually indestructible? 

One word – competition.

Starting after the 1973 Oil Crisis, Americans started importing cheaper and more fuel-efficient Japanese cars. By the early 1980s, Japanese automakers had about 20% of the U.S. market. 

To compete, U.S. automakers had to up their game. They had to sell better products or risk going the way of Studebaker. 

That’s free trade…

That’s capitalism…

That’s America, dammit…

It’s survival of the fittest. Competition motivates companies to continually improve. Those who do, prosper. Those who don’t, fail. The end result is a better selection of products at a better price. 

And as we’ll explore today, that’s one of the long-term risks of the tariff war that’s brewing.

But according to Trump’s economic team, tariffs are part of an ambitious plan to weaken the dollar and revive U.S. industry… a promise he campaigned on.

Tariffs Are Welfare for the Politically Connected

Here at The Freeport Society, we believe in free markets, free enterprise, and free trade.

We’re big fans of the father of free market economics, Adam Smith.

He wrote the Wealth of Nations in 1776 – the same year the United States declared independence. 

In it, he advocated for free trade between nations.

Specifically, he argued that nations should specialize in what they do best and trade freely, rather than trying to be self-sufficient. 

For example, if England produced wool efficiently… and France produced wine efficiently… both benefited from free trade rather than forcing domestic production of both goods.

Smith lectured the British government (and anyone who would listen) that tariffs on trade made the countries poorer, not richer. 

The only winners from tariffs would be the owners of the protected industries selling inferior products at inflated costs. 

That makes tariffs less like good economic policy and more like welfare for the politically connected.

But here we are in 2025 rehashing the same arguments from the 1770s. 

Sure, we can slap 25% tariffs on imported aluminum. But American companies that import aluminum will pay that tariff. To protect their margins, they’ll pass that cost onto consumers.

That just incentivizes American aluminum producers to charge 25% more than their foreign competition. 

And you and I will pay for it the next time we buy a new car, a plane ticket, or even a can of Dr. Pepper.

Are Tariffs Part of Trump’s Plan to Weaken the Dollar?

To be fair to Trump’s economic team, they say tariffs are there to nurture U.S. industry. 

Right now, the U.S. runs large trade deficits (it imports more than it exports), which Trump sees as weakening American manufacturing. 

Tariffs are meant to make imports more expensive. This would force companies to make more goods in the U.S. and shrink the trade deficit.

There’s another aspect to Trump’s tariffs that isn’t getting much play in the mainstream media.

Trump and his team believe the dollar is too strong relative to the currencies of America’s major trading partners.

That’s a problem if Trump wants to reshore manufacturing and create jobs for Americans.

A strong dollar makes U.S. exports cost more in overseas currency terms. This encourages manufacturers to move production overseas instead of locating them in America.

That’s where something called the “Mar-a-Lago Accord” comes in.

It’s an ambitious global trade and monetary reset that members of Trump’s economic team are pushing. And it would weaken the dollar while keeping it the global reserve currency.

Crucially, it involves other countries agreeing to weakening their currencies relative to the dollar.

Trump could be using the threat of tariffs to push America’s trading partners into accepting such a deal.

There’s a lot to unpack here. So, I’ll leave a more detailed look at what the Mar-a-Lago Accord is… and what it means for us as investors… for tomorrow’s update.

Until then, to life, liberty, and the pursuit of wealth,

Charles Sizemore

Chief Investment Strategist, The Freeport Society