Washington: Low growth, high debt and escalating wars topped the official agenda at the International Monetary Fund and World Bank annual meetings, but finance leaders spent much of their energy worrying about the potential impacts of a return of Donald Trump to power in November's U.S. presidential election.
Republican candidate Trump's gains in recent polls to erase much of the early advantage of his Democratic opponent, Vice President Kamala Harris, was part of nearly every conversation among finance officials, central bankers and civil society groups attending the meetings in Washington this past week.
Among concerns were Trump's potential to upend the global finance system with massive tariff increases, trillions of dollars more in debt issuance and a reversal of work to fight climate change in favor of more fossil fuel energy production.
"Everyone seemed to worry about the high uncertainty on who would become the next president, and what policies would be taken under the new president," Bank of Japan Governor Kazuo Ueda said.
Another central banker, speaking on condition of anonymity, described the concerns more bluntly: "It's starting to feel like Trump is going to win."
Trump has vowed to impose a 10 per cent tariff on imports from all countries, and 60 per cent duties on imports from China. These would hit supply chains throughout the world, likely triggering retaliation and raising costs.
German Finance Minister Christian Lindner told Reuters on Friday that there would only be losers in a U.S.-EU trade war.
Trump has also sought to entice U.S. voters with offers of numerous tax breaks, from extension of all 2017 individual tax cuts to exempting income from tips, overtime pay and Social Security retirement benefits. Budget analysts say this would add at least another $7.5 trillion in new U.S. debt over a decade, on top of the $22 trillion in debt growth previously estimated by the Congressional Budget Office through 2034.
