The ongoing trade tussle between the United States of America (USA) and China has shaken global share markets many times. This to and fro movements from both of these leading nations have already affected economies of many developing countries including India. USA’s latest conflicts on sanctions with Iran and Russia are some of the examples of its dominating nature. A new word of Trumpiasm is spreading in the trade world with its significant repercussions felt by all the nations. But the whole world is waiting for the next action by this Trump era i.e. What is the future of Multilateral Institutions with the USA and its current trading policy – Trumpiasm?
Trumpiasm in Bilateral Relations
Since the very first day of his presidency, Trump has been focussing on ‘America First’ policy which has been highly criticised by the world leaders. Be it the H1B visa limitation for Indian IT experts or ban on immigrants’ arrival in the USA, Trump has been looking at the things for his country’s sake only. The whole process of bilateral relations has been modified with a focus on America’s higher share in each deal.
Trump did not show any pity for China as well by posing 10 per cent tariff on $200 billion Chinese Goods. Chinese warned the USA for retaliation for their decision before announcing the tariffs but it did not impact Trump who was more focused on “America First” policy.
USA and Major Multilateral Institutions
With a goal to establish a framework for economic cooperation and development, two major financial institutes International Monetary Fund (IMF) and World Bank were introduced to the world at Bretton Woods, New Hampshire, the United States in July 1944.
International Monetary Funds (IMF)
IMF is a group of 188 nations whose major role is to promote international monetary cooperation along with providing loans and help countries designing their policy programs to solve payment problems. USA gives 16.52 per cent of Total IMF funds and turns out to be the biggest contributor in the organisation. It also contains the highest percentage of voting rights in IMF.
The World Bank has 189 member nations and it majorly promotes long-term economic development and poverty reduction by providing technical and financial support to help countries reform certain problematic sectors. The USA tops the contributor and vote percentage list, with 18.36 per cent in total amount contribution and 15.02 per cent in voting powers. The current President Jim Yong Kim is also a USA-South Korean origin person.
(Source: – IMF)
Future of Multilateral Institutions
With USA’s primary focus on bilateral relations with several countries, the onus has now come on the existence of these multilateral institutes. The USA who already holds major contribution in these institutes would like to pull its hand and invest money in some other market with its inclination towards bilateral relationships. If this happens, the policy makers for these institutes will have to strategies in a new way to manage these big institutions.
On one side, It may open doors for developing countries like India and China who are already looking to vast their reach in these kinds of big institutions. This will also be a great opportunity for them to gain some economic power at the international level.
The other side of the story can be a complete replica of the opportunity that these developing countries are looking for. Revamping these institutes in the current competitive era is not going to be easy as it can lead to a difference of opinions among developing nations, who would like to dominate these institutes in their infancy stages
Now, most of the things depend on the new economic term, ”Trumpiasm”, which will not only decide the future of these institutes but also the new pathway that trading world will follow in upcoming years.