The annual meetings of the International Monetary Fund and World Bank were dominated by concerns about low growth, high debt and escalating wars, but financial leaders were worried about the possibility of Donald Trump returning to power in the next U.S. presidential election. were preoccupied with the potential impact of
Trump’s recent rise in the polls, erasing much of the lead initially held by his Democratic rival, Vice President Kamala Harris, was a sign of Trump’s recent rise in the polls, according to Treasury officials, central bankers and others who attended the meeting in Washington. has become a hot topic among civil society organizations.
There were concerns that Trump could disrupt the global financial system by significantly raising tariffs, issuing trillions of dollars in additional government debt, and shifting efforts from climate change mitigation efforts to increasing fossil fuel energy production. .
Bank of Japan Governor Kazuo Ueda said, “Everyone seemed concerned about the high degree of uncertainty about who the next governor would be and what kind of policies would be adopted under the new governor.” .
Another central bank official, speaking on condition of anonymity, expressed concerns more directly: “It’s starting to look like Trump is going to win.”
President Trump has promised to impose 10% tariffs on imports from all countries and 60% on imports from China, which will impact global supply chains, trigger retaliation and cost is likely to rise. German Finance Minister Christian Lindner has warned that the trade war between the US and the EU will only create losers.
President Trump has also proposed a number of tax cuts to woo U.S. voters, which budget analysts say will increase the debt by $22 trillion by 2034, which the Congressional Budget Office had previously projected. In addition, it estimates that at least $7.5 trillion in new U.S. debt will be added over 10 years.
By contrast, Harris’ victory is seen by Treasury officials as a continuation of President Joe Biden’s recommitment to multilateral cooperation on climate change, corporate taxes, debt relief, and development bank reform, although her The plan would also result in an increase in debt, albeit a reduction in the size of the debt. More so than Trump.
Financial markets are seeing a resurgence of “Trump trading” in various assets, betting on President Trump’s victory as poll numbers improve. The dollar has posted its biggest monthly gain in more than two-and-a-half years, with a measure of the greenback against major currencies up 3.6% so far in October. Brazil’s central bank president Roberto Campos Neto said the market’s pro-Trump bets were already having an inflationary impact on long-term interest rate futures in a dollar-sensitive economy, adding that Mr. Trump and Mr. Harris’ fiscal plans He added that there is an element of inflation.
These concerns about President Trump’s reversal on trade and spending come as the IMF declared that U.S. strength offsets weaknesses in China and Europe, and that the fight against global inflation has been largely won without significant job losses. It surfaced.
IMF Managing Director Kristalina Georgieva urged policymakers to start reducing the huge debt caused by the coronavirus to avoid a future of low growth that fuels public dissatisfaction.
Asked about how the prospect of President Trump’s return affected the meeting and the IMF’s policy advice, Georgieva said the discussion focused on addressing current economic challenges.
“The sentiment of our members is that elections are for the American people,” Georgieva said at a news conference. “What we need to identify is what the challenges are and how the IMF can constructively address these challenges.”
Debt, tariffs and trade wars: Why Trump’s return is a concern for global finance
