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Expand chart
Data: Investing.com, Macrotrends; Chart: Andrew Witherspoon/Axios

Fears of a major currency devaluation by China have gripped the market in recent days, but if history is a guide, it's really a dollar devaluation that should worry investors.

The big picture: President Trump's dissatisfaction with the dollar's strength and the boiling trade war with China are setting the stage for a second Plaza Accord, or this time a "Mar-a-Lago Accord," experts say, with the dollar falling and the yuan rising.

Why it matters: A weak dollar makes U.S. exports more competitive internationally, but also weakens Americans' purchasing power.

Background: In September 1985, the U.S. joined with France, Germany, Japan and the U.K. to create the Plaza Accord, an agreement to reduce the value of the dollar, particularly against the Japanese yen.

  • The value of the dollar fell by 51% versus the yen from 1985 to 1987, and by 1995, it had dropped more than 70%.

What they're saying: "The stronger dollar is bad not just for the US, but also for countries with significant amounts of dollar denominated debt. Think most emerging markets," Douglas Borthwick, managing partner at Makro Intelligence, tells Axios in a message.

  • "There comes a time when the dollar is so strong that it is destabilizing to the world economy. The way out of that is a Plaza Accord. A re-alignment of exchange rates."

How it works: In addition to helping U.S. multinational firms and emerging market countries with high amounts of debt in dollars — which gets more expensive as the dollar appreciates — major exporting countries in Europe as well as Japan would benefit from a stronger yuan because it would make their exports more competitive against China's.

What's next? Kuniyuki Hirai, head of trading at investment bank MUFG, says he sees the yuan falling as low as 6.05 per dollar in the not-too-distant future.

Yes, but: Many are skeptical of Trump's ability to reach a multilateral deal of this size and scope, given his general antagonism toward allies and adversaries alike, or that China would allow such an agreement. But China may not have a choice.

Go deeper

By the numbers: Where the earmarks are wanted

Expand chart
Data: House Committee on Appropriations; Chart: Danielle Alberti/Axios

The Dallas-Fort Worth area is being targeted for the largest collective earmark request in the country, according to a detailed breakdown of overall requests released by the House Appropriations Committee.

Why it matters: House appropriators are trying to balance bipartisan momentum for infrastructure investment with "pork-barrel" spending's checkered political history. The data dump is an effort to provide transparency for what are now termed "community project funding" requests.

Democrats open to user fees for infrastructure deal

President Biden sits Thursday with Sen. Shelley Moore Capito (R-W.Va.) as they discuss his $2.3 trillion infrastructure proposal. Photo: T.J. Kirkpatrick/The New York Times/Bloomberg via Getty Images

Some Senate Democrats are open to paying for a compromise infrastructure package by imposing user fees, including increasing the gas tax and raising money from electric car drivers through a vehicle-miles-traveled charge.

Why it matters: By inching toward the Republican position on pay-fors, some Democrats are bucking President Biden's push to offset his proposed $2.3 trillion plan by focusing only on raising taxes on corporations and the wealthy.

Progressive legal advocacy group spinning off from sponsor

Illustration: Annelise Capossela/Axios

A leading progressive legal advocacy group is spinning off from the sprawling dark money network that seeded it, the group tells Axios.

Why it matters: Demand Justice's decision to separate from the Sixteen Thirty Fund, a "fiscal sponsor" for scores of largely left-wing organizations, will provide the public with its first detailed look behind the curtain of the influential progressive nonprofit.