The Trump Effect at the IMF?

Just a quick hit this evening about events at the recent meeting of the International Monetary Fund and the World Bank. When they released their closing statement it was largely the same as the agenda items which had been set forth in the fall. But there were a couple of notable changes which were quickly picked up on and highlighted by ABC News. The edits dealt with free trade versus fair trade and climate change initiatives in relation to monetary policy.

Global finance leaders sought to avoid conflict with the Trump administration over trade and environmental policy and welcomed signs the world economy is pulling out of the doldrums.

The International Monetary Fund dropped a sharp condemnation of trade protectionism and references to climate change from a statement at the close of its spring meetings with the World Bank. Gone was a call for nations to “resist all forms of protectionism” that had been in an October communique…

Carstens said that it was important to recognize the viewpoints of different countries. “We all want free and fair trade and that is what is reflected in the communique,” he told reporters when asked why the language on protectionism had been dropped.

Yes, the changes might be considered “subtle” and there were still underlying references to both subjects, but the message seemed clear. On the issue of trade, the IMF had previously been all onboard with the general concept of “free trade.” You’ll note that the date of their last letter was in October, when Hillary Clinton was still widely expected to be the next President of the United States. Now, with Trump in office, it’s changed to, “free and fair trade.” In terms of the discussion in the United States, free trade and fair trade are very different things and it’s laughable to think that the IMF board isn’t tuned in to those distinctions.

As to the investments in climate change, carbon taxes and all the rest, President Trump has made his views clear on the subject via his appointments at the EPA and the rolling back of Obama era regulations. There’s still discussion in the rest of the document which touches on this but it’s disappeared from the main page. Read into that what you will.

Overall, this speaks more to the overall influence of the United States and the deference that the rest of the world pays no matter who is hanging out in the Oval Office. If Hillary Clinton had won we likely would have seen the now deleted sections of the letter emphasized even more strongly. But with Trump being in charge, they are bending to follow the lead he is setting. This really isn’t a mystery. It’s the IMF and without our cooperation and support their mission becomes significantly harder. Also, it’s one more example of how Trump has been changing the game without actually getting any new legislation passed or issuing any direct orders. Some things tend to warp within his orbit just from the simple fact of his being there.

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