Tempered Trump draws IMF sigh of relief

DONALD Trump took power in January pledging to overhaul a global order that he said cheated middle-class Americans, with a promise to tear up trade agreements and impose tariffs on China and Mexico.

Some of Trump’s policy advisers named allies such as Germany and Japan as possible targets for economic retaliation. Fast-forward almost 100 days into Trump’s presidency and the world’s most powerful finance officials, gathered in Washington for the International Monetary Fund spring meetings, have found an administration far from the disruptive force Trump promised.

Although Trump did act on his campaign promise to tear up a 12-nation Pacific trade pact that had been the cornerstone of president Barack Obama’s Asian pivot, he has refrained from pulling out of the North American Free Trade Agreement, did not carry out a pledge to label China a currency cheat, and his administration has signalled the US may stay in the Paris climate accord.

Constraints put on Trump by Congress and the courts on issues ranging from healthcare to immigration that would have filtered into the economy, and the slow pace with which he is filling key administration jobs, have played a role.

But these policymakers said that important initial decisions had been far more centrist than expected. The EU’s commissioner for economic and financial affairs, Pierre Moscovici, summed up a widely shared sentiment as he highlighted how two people at the top of Trump’s team — Treasury Secretary Steven Mnuchin and Gary Cohn, director of the National Economic Council — have curbed the worst fears over the presidency.

“We have the feeling that Mnuchin and Cohn are sensible people ,” Moscovici said.

The EU view of a more pragmatic administration was shared by Mexico, whose peso currency tumbled but has recovered after Trump’s threat to impose punitive tariffs. Mexico’s finance undersecretary, Vanessa Rubio Marquez, said discussions with the Trump administration had become “anchored” around issues “Mexico would be able to deal with”.

Though much about Trump’s policies remains unformed as the administration approaches the 100-day mark, the more extreme risks — such as a trade war — seem to have receded.

“My belief is that a multilateral framework promoting free trade will continue. There won’t be huge changes to that,” said Bank of Japan governor Haruhiko Kuroda.

Mnuchin on Thursday said tax reform remained a priority as were other steps to boost US growth. He said faster growth would mean a stronger world economy, and that it was constructive to co-ordinate policies through international organisations such as the Group of 20.

“This administration is willing to reach out and get ideas from the outside,” Mnuchin told bankers at an IMF parallel conference. But there are still risks. The Trump administration said on Thursday it would embark on a study of whether cheap steel imports from China and other countries were damaging national security.

And there are still huge gaps in personnel. “Many of the top jobs are still vacant,” said a European diplomat at the IMF meetings.

“Nobody outside the US really knows who is the most powerful or influential one at moment.”