By Akihiro Okada

8:00 JST, April 26, 2025

U.S. President Donald Trump is significantly trying to rewrite the rules of postwar international trade and the international order, similar to the “Nixon Shock” of 1971, when then President Richard Nixon suspended the dollar’s convertibility into gold.

In both cases, the United States sought to reduce what it considered its excessive burden in maintaining the international order.

The key difference lies in the context: Nixon faced a struggling and stagnant U.S. economy burdened by the massive costs of the Vietnam War, while Trump stands at the helm of the sole superpower in the global economy.

As the United States attempts to reset the postwar international order for the second time, Japan’s position too is very different from what it once was. Japan will need to grasp these changes and forge a new strategy.

The 1944 Bretton Woods Agreement, which fixed exchange rates among countries and established the dollar as the reserve currency through its convertibility into gold, stabilized the post-World War II global economy.

However, the U.S. economy was exhausted by the costs of the Vietnam War, and as Western Europe and Japan caught up, the United States lost its overwhelming advantage by the 1960s. U.S. gold reserves declined rapidly, the dollar fell, and the United States fell into a dollar crisis.

As a result, on Aug. 15, 1971, Nixon announced the suspension of the dollar’s convertibility into gold, which was known as the Nixon Shock. The Nixon Shock marked the collapse of the Bretton Woods system.

The U.S. State Department released historical documents on the economic diplomacy of the Nixon administration in 2009. The documents from 1972 and 1973 are particularly interesting.

The Group of 10 countries, including the United States, Japan and several European nations, signed the Smithsonian Agreement in December 1971. This agreement sought to stabilize the exchange rates.

However, the dollar crisis did not subside. Countries began transitioning to a floating exchange rate system in February and March of 1973.

The diplomatic........

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