With a few honourable exceptions, such as in the cases of Japan and China, political and business leaders seem desperate to appease US President Donald Trump over his many trade demands. More worrying is that multilateral financial institutions also seem to be running scared of his bullying tactics.
From the International Monetary Fund (IMF) and the World Bank downwards – or perhaps “outwards” would be a better term – these institutions appear to be falling down on the job when it comes to alerting the world to the dangers of Trumponomics.
Global economic growth is slowing under the actual and potential impact of Trump’s tariffs and the effect these are having on confidence and investment. Financial markets were thrown into initial turbulence by Trump’s vacillations over the strength of the US dollar and his verbal attacks on the US Federal Reserve – with much worse likely still to come.
Yet while the impact of the tariffs is almost universal, the global family of multilateral institutions is not raising the alarm clearly enough.
In the case of the IMF, the World Bank and the Inter-American Development Bank, the fact that they have their headquarters in Washington – just a stone’s throw away from the White House – might help explain their apparent reluctance to be more critical. However, that is by no means the whole story.
What the multilateral development banks appear to be afraid of is that the Trump administration will cut off, or at least suspend, critical US financing contributions to them. It has reportedly already done so in the case of the World Trade Organization, and it has walked away from both the World Health Organization and the Paris climate agreement.
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