WASHINGTON | April 21, 2018 (AP)(STL.News) Treasury Steven Mnuchin wants the International Monetary Fund to do more to address what the Trump administration says are unfair trade practices and says the World Bank should steer cheap loans away from China and toward poorer countries.
Such trade policies “impede stronger U.S. and global growth, acting as a persistent drag on the global economy,” Mnuchin said as the lending agencies were poised Saturday to wrap up their spring meetings, where the administration’s “America First” approach has put it at odds with other countries.
He urged the IMF to go beyond its traditional role as an emergency lender for countries in financial distress and said it should more closely monitor the practices of countries that persistently run large trade surpluses.
“The IMF must step up to the plate on this issue, providing a more robust voice,” Mnuchin said. “We urge the IMF to speak out more forcefully on the issue of external imbalances.”
The World Bank, he said, must not back away from shifting its lending from fast-growing developing countries such as China to poorer nations. In a speech prepared for the bank’s policy committee, Mnuchin urged the bank to aim its resources at “poorer borrowers and away from countries better able to finance their own development objectives.”
Many have used the finance meetings to protest President Donald Trump’s protectionist trade policies, which mark a reversal of seven decades of U.S. support for ever-freer global commerce.
“We strongly reject moves toward protectionism and away from the rules-based international trade order,” said Már Guðmundsson, governor of the Central Bank of Iceland. “Unilateral trade restrictions will only inflict harm on the global economy.”
While finance officials struggled to find common ground with Washington on trade, they agreed on the importance of coordinating other policies in an effort to sustain the strongest global economic expansion since the 2008 financial crisis.
“We have to keep this group working together,” said Nicolas Dujovne, Argentina’s treasury minister.
In addition to wrangling over trade, finance officials from the Group of 20 powerful economies focused on geopolitical risks and rising interest rates, two threats to growth. Dujovne, whose country is chairing the G-20 this year, met with reporters Friday to summarize talks held as a prelude to the IMF-World Bank meetings.
The U.S. has rattled financial markets with a series of provocative moves in recent weeks.
Last month, it imposed taxes on imported steel and aluminum, and later proposed tariffs on $50 billion in Chinese products as a punishment for Beijing’s aggressive efforts to obtain U.S. technology. China countered by targeting $50 billion in U.S. exports. Trump then ordered his trade representative to go after up to $100 billion more in Chinese products.
Finance leaders repeatedly sounded warnings about a potential trade war.
“The larger threat is posed by increasing trade tensions and the possibility that we enter a sequence of unilateral, tit-for-tat measures, all of which generate uncertainties for global trade and GDP growth,” Roberto Azevêdo, director-general of the World Trade Organization, told the IMF’s policy committee.
French Finance Minister Bruno Le Maire said the steel and aluminum tariffs could lead to retaliation by other countries and “a significant risk that the situation could escalate.” He said “tensions between the U.S. and China have taken a worrying turn.”
Despite the trade disputes, the global economy is enjoying its strongest growth in years.
The IMF forecasts 3.9 percent growth this year and next, the fastest since 2011, thanks to increasing investment and solid job growth. Most of the world is sharing in the prosperity, making this the broadest economic expansion in a decade.