ALL EYES ON MNUCHIN AT G20
The U.S. treasury secretary will have some explaining to do, writes Joe Chidley
Why are the names of Donald Trump’s cabinet secretaries so well known, when hardly anyone can remember who Barack Obama’s were?
I had to look up the name of Obama’s secretary of housing (Julian Castro), but I have no trouble picturing Dr. Ben Carson.
As well, I take no pride in knowing that former Texas governor Rick Perry, who famously couldn’t remember the name of the department of energy, is now secretary of energy. Obama’s latest choice for that role was some guy named Ernest Moniz, who never even governed a state (though he does have a PhD in theoretical physics).
Obama’s secretary of commerce was Penny Pritzker, who at least is a billionaire. But there end the similarities with Trump’s Wilbur Ross, the billionaire who’s been dubbed “the bankruptcy king.” Who could compete with that?
Flashy nicknames aside, I suspect one reason we pay so much attention to these folks is that their boss tends to be so big on declaratives and so light on details. Trump often sows confusion rather than clarity. So as the rest of the world tries to figure out what he means, it turns for answers to the people who, we assume, can decipher it all.
This week, Steve Mnuchin, Trump’s treasury secretary, will make his international debut at the meeting of G20 finance ministers in Baden Baden, Germany on Friday and Saturday. The world will be paying attention, and not just because Mnuchin has his own royal tag, “Foreclosure King,” for his time heading up a mortgage company that foreclosed on thousands of American homeowners. It’s also because the Trump administration seems hell-bent on disrupting the financial world order that the G20 has worked so hard to create.
Its policies run plainly counter to the principles the G20 has agreed upon for years. Against the group’s free trade pronouncements about an open world economy, Trump has economic nationalism. Against its acknowledgment of the need to address global warming, he has a hoax perpetrated by the Chinese. Against its commitment to address global poverty — well, Trump will cut foreign aid dramatically. And against its pledge for financial regulation that ensures stability, he has vowed to repeal Dodd-Frank.
So Mnuchin might not be walking into the warmest of receptions. It won’t help that his boss has criticized, for one reason or another, many of the countries represented there — Mexico, China, Japan, Australia, France, even Sweden.
Now, Mnuchin seems a smart guy, and I bet he can handle any frostiness. But he might have a hard time if his G20 counterparts ask him for clarity on American policy.
Consider the many questions surrounding the administration’s stance on the currency. Trump and Mnuchin might not see eyeto-eye. Back in January, the thenpresident-elect told the Wall Street Journal that the greenback was “too strong.” That surprised foreign exchange markets, which saw a hint of the new administration abandoning the commitment to a strong dollar, a pillar of U.S. economic policy for decades; the greenback sold off. But during his confirmation hearing days later, Mnuchin backtracked on his boss’s statement, saying it “was not meant to be a long-term comment.”
The other fuzzy currency issue is manipulation. Trump keeps charging that China is depressing the yuan artificially (it isn’t, but anyway), and has vowed to declare it a currency manipulator. Mnuchin has said his department will study the issue before it makes such a move. But others in the administration have cast stones more widely, suggesting, for instance, that Germany and Japan gain unfair trade advantage through devalued currencies.
That stance, though, is at odds with what’s going on inside the U.S. In becoming less accommodative, its monetary policy is a global outlier, and is pushing the greenback higher. Meanwhile, many of Trump’s policies – more spending, America First trade and procurement, a border adjustment tax – would inflate the dollar against other currencies.
So it seems the U.S. wants stronger foreign currencies, but doesn’t want a weaker dollar, but wants exports to be competitive, but also wants policies that will make the dollar stronger. We’ll see if Mnuchin clears any of this up.
And oh, in case you’re wondering, Obama’s last treasury secretary was Jack Lew, whom the New York Times once described as “a low-profile steward for a low-profile time.”
Steve Mnuchin should be so lucky.