From Plaza Accord to Trump 2.0: Historians Warn Tariffs Could Trigger 1980s-Style Currency Chaos
Economic historians are sounding alarms as Asia’s market turmoil increasingly resembles the 1980s currency crises, with Trump’s tariff threats playing a similar role to the Plaza Accord in destabilizing regional currencies.
Eerie Parallels:
| 1985 Plaza Accord | 2025 Trump Tariffs |
|---|---|
| Yen appreciated 51% | Yuan depreciating rapidly |
| U.S. trade deficit focus | Same protectionist rhetoric |
| G5 coordinated action | No multilateral framework |
Key Differences:
- Scale: 200B in 1985
- Weapons: China’s $3T reserves vs. Japan’s limited tools
- Speed: Algorithmic trading accelerates contagion
“Markets are underestimating how quickly this could spiral,” said Yale’s Stephen Roach, noting dangerous similarities:
- Competitive devaluation risks
- Protectionist tit-for-tat
- Liquidity crunch potential
The 1987 stock market crash serves as a cautionary tale of what happens when currency wars spin out of control—a scenario looking increasingly plausible today.
