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IMF and World Bank Leaders Worry Over Potential Trump Return

IMF and World Bank Leaders Worry Over Potential Trump Return

At the recent IMF and World Bank meetings, key topics included low growth, high debt, and ongoing conflicts. However, finance leaders also voiced concerns about a possible Trump return to the U.S. presidency. Trump’s recent poll gains over Vice President Kamala Harris have raised worries among attendees, including finance officials and central bankers in Washington.

The primary concerns focus on Trump’s proposed policies. These include steep tariffs, increased debt, and a shift from climate action to fossil fuels. Trump has proposed a 10% tariff on all imports and 60% duties on Chinese imports. These could disrupt supply chains and trigger global retaliation. German Finance Minister Christian Lindner warned that a U.S.-EU trade war would harm both sides.

Trump has also promised major tax breaks. These include extending 2017 tax cuts and exempting income from tips, overtime, and Social Security. Analysts predict these cuts would add $7.5 trillion to U.S. debt in a decade, worsening the projected $22 trillion debt by 2034. A Harris victory would likely continue Biden’s policies on climate and debt relief. Her approach would increase debt less than Trump’s. Harris criticized Trump’s tariffs as a costly “consumer tax” for American families.

Financial markets are reacting as Trump’s poll gains drive up stocks, bitcoin, and the Mexican peso. The dollar has also surged, with Standard Chartered analyst Steve Englander attributing most of its rise to Trump’s improved odds. Brazil’s central bank chief Roberto Campos Neto noted that Trump’s popularity is raising inflationary expectations.

IMF Managing Director Kristalina Georgieva noted the IMF’s focus on solving economic challenges, not U.S. election outcomes. Saudi Finance Minister Mohammed Al-Jadaan called for continued U.S.-IMF cooperation, as seen with past administrations. (Reuters)

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