(Bloomberg) — The world’s finance chiefs flocked to Washington this week to see up close how President Donald Trump’s effort to overhaul the global economic order is shaking markets and eroding growth.
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As they gathered in private meetings and opined on panels about how his tariffs upend free-trade orthodoxy, markets were whiplashed by signals the US may agree to cut its massive levies on China, which even Treasury Secretary Scott Bessent said amount to a trade embargo between the world’s biggest economies.
The officials were among those who descended on the US capital from almost 200 countries, ostensibly for the spring meetings of the International Monetary Fund and World Bank. They typically gather to address the the top challenges to the global economy — and Washington was at the top of that list this week.
Reassurances from the White House that the broad outlines of several new trade deals were around the corner contrasted with delegations still trying to figure out what Trump’s team wants and what they can offer.
With the global economy headed for a slowdown and no resolution in sight for the man-made trade chaos, some participants felt relieved the situation didn’t worsen this week but felt far from secure about what’s next.
“The worry I hear more often is actually not even tariffs, it is uncertainty,” IMF Managing Director Kristalina Georgieva told reporters Thursday. “Let’s have clarity.”
This weeks’s buzzword “uncertainty” even crept into corporate boardrooms, with firms pointing to the dangers in earnings calls, and on trading floors across the globe amid the pace of Trump’s policy shifts.
“Reacting to all these headlines is, frankly, a bit of a nightmare for strategists and investors alike,” said Michael Brown, senior research strategist at Pepperstone in London. “It speaks to the general degree of incoherence, uncertainty, and volatility with which the White House continue to make policy.”
The week began with the IMF downgrading its growth forecasts to the weakest since the pandemic, and warning that conditions may get even worse.
Markets then rallied after Trump said he’d be willing to “substantially” pare back his 145% tariffs on China and insisted he had no intention to fire Federal Reserve Chairman Jerome Powell, easing concerns that the independence of the world’s most important central bank was at risk.
But that optimism was punctured when Bessent clarified the US wouldn’t unilaterally lower tariffs on China. And in a sign of their strains, the top US economic official had no meetings planned with his Chinese counterparts during the week, a time when they would usually hold talks.
A spokesman for China’s Commerce Ministry, He Yadong, dismissed speculation that bilateral progress has been made, saying “any reports on development in talks are groundless.” Trump on Thursday, however, insisted negotiations had begun, without providing details.
Amid the back and forth, one government official of a Group of Seven economy said the balance of power seemed to have shifted in the past few weeks, as the US needs to deliver a successful trade negotiation to prove its strong-arm policy is working.
As a result, there’s less immediate urgency to meet the US on its terms, the official said, declining to be named as the deliberations are private.
“We still are a little bit far away from understanding what’s the end game,” said Malaysia’s Second Finance Minister Amir Hamzah Azizan, whose country plans to start talks this week.
Bessent on Thursday touted an “understanding” with South Korea could be reached as soon as next week.
Visiting officials in public and private were careful to tread a line between pushing back against US tariffs and not seeking to stoke tensions or antagonize Trump. Several participants in the G-20 meetings said Bessent sought to ease their concerns while nobody aggressively criticized the trade policy.
There were also pockets of support for US complaints about the global trading system, which Trump has mostly directed at Beijing.
“The US does have an important point around some of the global imbalances that have built up in the global economy these last decades,” said UK Chancellor of the Exchequer Rachel Reeves.
Several officials said they were relieved that Trump and Bessent seemed to walk back from some of their harder lines, and that the Treasury secretary committed to supporting the IMF and World Bank, soothing fears of withdrawal by their biggest member.
Nadia Calvino, president of the European Investment Bank, said Bessent’s speech Wednesday — where he highlighted “America First does not mean America alone” — was “a very welcome development, because the rest of the world is showing a lot of goodwill in trying to continue to have a constructive and positive relationship with the US.”
But others signaled it’s a long road back to normalcy.
“Honestly, the US needs to earn our confidence back,” Sweden’s Minister of Finance Elisabeth Svantesson said in an interview.
“Many of us are surprised with the intensity and the pace” of the trade war and how this US administration communicates, she said. “If you change the message often, there’s an issue of confidence. To cement the confidence, we need actions.”
—With assistance from Yujing Liu, Erica Yokoyama, Jana Randow, Jorgelina do Rosario, Alexander Weber, Manuela Tobias, Paul Wallace, Laura Noonan, Zijia Song, Kamil Kowalcze, Philip Aldrick and Catherine Lucey.
