The IMF and the World Bank were set up as guarantors of the global capitalist system with the US at its head, but now all is changing as Trump rejects the old structure, explains John Clarke 

The Bretton Woods Project informs us that the World Bank and the International Monetary Fund (IMF) were ‘set up at a meeting of 43 countries in Bretton Woods, New Hampshire, USA in July 1944. Their aims were to help rebuild the shattered postwar economy and to promote international economic cooperation.’ 

A more critical view of these institutions might present them as enforcers and regulators devoted to advancing an exploitative world order in which the hegemonic power of the United States was the cornerstone. On that basis, the Trump presidency and its America First approach have called into question the essential elements of the international arrangements that were forged at Bretton Woods more than eighty years ago. 

Given the developments that have taken place over the last few months, especially the Trump administration’s turn to global trade war, it is hardly surprising that this year’s spring meetings of the IMF and World Bank in Washington will unfold this week under conditions of crisis and discord.  

Shock waves 

An article in the Guardian, on 20 April, suggested that when ‘the world’s finance ministers and central bank governors gather at the International Monetary Fund in Washington this week, it may kindle memories of another meeting, also held against the backdrop of a global economic crisis, in autumn 2008. This time, however, the focused and united response that was developed to deal with an acute economic crisis is very unlikely to emerge from the deliberations.’ 

The Guardian article rather bitterly argued that the ‘historic shock to the global trading system’ that will be under discussion ‘has been entirely manufactured in the White House.’ While it could be argued that the protectionist turn by the US has been driven by rather more than the whims of Donald Trump, there is no doubt that his decision to wield the tariff weapon on such a major scale and to break with long-established forms of international co-operation has sent shock waves through the entire system of global capitalism. 

Kristalina Georgieva, the IMF’s managing director, described Trump’s course as ‘a significant risk to the global outlook’ and this view is reflected in the Fund’s newly released World Economic Outlook. It predicts that under ‘the reference forecast that incorporates information as of April 4, global growth is projected to drop to 2.8 percent in 2025 and 3 percent in 2026—down from 3.3 percent for both years in the January 2025 WEO Update, corresponding to a cumulative downgrade of 0.8 percentage point, and much below the historical (2000–19) average of 3.7 percent.’ 

It is clear, however, that these projections are somewhat tentative and that there is room for things to get very much worse than predicted. As the document acknowledges, intensifying ‘downside risks dominate the outlook. Ratcheting up a trade war, along with even more elevated trade policy uncertainty, could further reduce near- and long-term growth, while eroded policy buffers weaken resilience to future shocks.’ 

A 22 April blog post, written by the IMF’s director of research, Pierre-Olivier Gourinchas, captured, not only the immediate dangers, but also the full enormity of the changes that are underway. He argued that the ‘global economic system under which most countries have operated for the last 80 years is being reset, ushering the world into a new era. Existing rules are challenged while new ones are yet to emerge.’  

The World Trade Organisation (WTO) has reached similar conclusions, bleakly noting that the ‘outlook for global trade has deteriorated sharply due to a surge in tariffs and trade policy uncertainty.’ The WTO’s director general, Ngozi Okonjo-Iweala, has also expressed particular alarm at the ‘decoupling’ of the US and Chinese economies, with ‘trade between the two geopolitical rivals … expected to plunge by 81-91% without exemptions for tech products such as smartphones.’ Such a huge decline in trading relations would have ‘far-reaching consequences.’ 

The Guardian’s comparison between the purposeful international interventions of 2008 and the situation today is quite valid. The G20 Research Group, reporting on a meeting of ‘world leaders’ that held in 2008, claimed that it reached ‘a common understanding of the root causes of the global crisis, reviewed actions countries have taken and will take to address the immediate crisis and strengthen growth and agreed on common principles for reforming our financial markets.’  The assembled leaders also vowed to reject ‘protectionism, which exacerbates rather than mitigates financial and economic challenges.’  

The meetings that play out in Washington this week will have no such sense of common purpose and, while we may expect bland and diplomatic formulations in final communiques, fundamental and bitter differences will dominate the proceedings. The sudden change in the role that the US plays in the world has transformed things so seriously that the global institutions are still reeling. 

Discarded allies 

Hung Tran, former deputy-director of the IMF, has pointed out that while ‘the trade war is top of mind for delegates at the IMF-WB 2025 Spring Meetings, there is also concern about US policy towards the two Bretton Woods institutions.’ He expressed concern that the US might use these meetings to try to limit the functioning of these bodies or even withdraw ‘from one or both institutions.’ That such a well-placed individual poses the possibility of the US walking away from the global order it established in 1944 and has dominated ever since is yet another indication of the massive changes that are underway. 

An article in Geneva Solutions, written shortly before Trump’s return to the White House, accurately predicted just how seriously the second Trump administration would reject the entire multilateral framework. It quotes from the notorious Project 2025, an 887-page plan drawn up by Trump supporters, that insists that the ‘United States must return to treating international organisations as vehicles for promoting American interests –or take steps to extract itself from those organisations.’ 

Trump’s trade war has placed a great deal of emphasis on trying to contain the rising power of China, as the main rival of the US. However, his protectionist measures have also been directed at long-established allies, including the imperialist junior partners that have accepted the leading role of the US. The leaders of a number of these countries have commented on the fundamental change in global relations that Trump is ushering in. However, Canada’s prime minister, Mark Carney, faced with an exceptionally high level of economic integration with the US and striking a combative pose because he is in the midst of an election, has been especially forthright. 

Speaking to CCN, on 28 March, Carney declared that the ‘old relationship we had with the United States based on deepening integration of our economies and tight security and military cooperation is over.’ He added that ‘we will need to pivot our trade relationships elsewhere, and we will need to do things previously thought impossible at speeds we haven’t seen in generations.’ 

In announcing the release of his Liberal Party’s election platform, on 20 April, Carney continued to drive home this message of a fundamentally changed relationship with the US and drastic remedies in the face of it. He described the present moment as ‘the biggest crisis of our lifetimes’ and set out plans to reconfigure Canadian capitalism and enhance its competitiveness globally by deploying a highly interventionist state power that would ‘lead and catalyze private investment.’ 

Carney’s perspective is entirely in line with the view put forward by the IMF’s director of research. More than eighty years of a world order under US leadership have come to an end. Other countries will still face the US as an economic rival, a predatory power or a military threat but it will no longer be the cornerstone of a global system. 

That US-led system included the ongoing interventions and harsh economic medicine provided by the Bretton Woods institutions. As they gather for their meetings, which are ironically but necessarily being held in Washington, these bodies are caught up in the unfolding crisis. They must redefine their role, at this volatile and dangerous moment, or be set aside. The US will no longer play the role it established for itself in 1944 and no one within in the institutions of global capitalism can be sure what comes next.