US presidential election looms over IMF and World Bank annual meetings
WASHINGTON — Global financial leaders face great uncertainty when they meet next week in Washington: who will win the US presidential election and shape the policies of the world’s largest economy?
Republican candidate President Donald Trump and Democratic candidate Vice President Kamala Harris have spoken little about their plans for the United States International Monetary Fund and the World Bank. But their different views trade, tariffs and other economic issues will be on the minds of financial leaders as they attend the financial institutions’ annual meetings.
IMF Managing Director Kristalina Georgieva hinted at what is at stake in a speech ahead of the meetings on Thursday.
Without naming TrumpShe warned that “major players, driven by national security concerns, are increasingly resorting to industrial policies and protectionism, creating one trade restriction after another.”
She said trade “will not be the same engine of growth as before” and warned that trade restrictions are “like pouring cold water on an already tepid global economy.”
As president, Trump promises one 60% tariff on all Chinese goods and a “universal” tariff of 10% or 20% on everything else entering the United States, emphasizing that the costs of taxing imported goods are absorbed by the foreign countries that produce those goods.
However, say mainstream economists they essentially amount to a tax on American consumers that would make the economy less efficient and increase inflation in the United States.
Trump has also embraced isolationism and heavily criticized multilateral institutions. During his first term, he signed an executive order to withdraw from the Trans-Pacific Partnership trade deal and replaced the North American Free Trade Agreement with the United States-Mexico-Canada Agreement. His government blocked new appointments to the World Trade Organization’s appellate body when the judges’ terms expired, leaving the organization without a functional appellate body.
World Bank President Ajay Bangawho also gave a speech previewing the rallies on Thursday, spoke directly about the election in a question-and-answer session with reporters. He credited Trump for increasing investment during his presidency in the International Bank for Reconstruction and Development, which provides loans to middle-income developing countries.
“Then the question will be: how will the nuances of each government be different,” Banga said. “I don’t know yet, so I’m not going to speculate on how to deal with it.”
Harris did not specify her views on the World Bank or the IMF, although while she has embraced some tariffs, she is more likely to continue the Biden administration’s approach of prioritizing international cooperation over threats. The Biden-Harris administration has lifted the tariffs imposed on China during the Trump administration and in May introduced significant tariffs about Chinese electric vehicles, advanced batteries, solar cells, steel, aluminum and medical equipment.
Harris met Banga in June 2023 as he began his five-year term as president of the World Bank and then released a statement praising “the steps taken to evolve the World Bank – including expanding its mission to build resilience to global challenges such as climate change, pandemics, fragility and conflict. ”
Georgieva, who did not directly address the election in her speech, said: “We live in a distrustful, fragmented world where national security has risen to the top of the list of concerns for many countries. This has happened before – but never at a time of such great economic interdependence. My argument is that we should not allow this reality to become an excuse for doing nothing to prevent a further rupture of the global economy.”
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