- 4/23/2025
Treasury Secretary Scott Bessent delivers remarks about U.S. global trade policy at the Institute of International Finance in Washington, D.C.
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00:00Good, thank you. Excuse me. Good and thank you for that kind introduction. It's an honor to be here.
00:16In the final months of World War II, Western leaders convened the greatest economic minds
00:23of their generation. They're tasked to build a new financial system. At a quiet resort high up in
00:30the mountains of New Hampshire, they laid the foundation for Pax Americana. The architects of
00:37Bretton Woods recognized that a global economy required global coordination. To encourage that
00:44coordination, they created the IMF and the World Bank. These twin institutions were born after a
00:52period of intense geopolitical and economic volatility. The purpose of the IMF and the
00:59World Bank was to better align national interests with international order, thereby bringing stability
01:06to an unstable world. In short, their purpose was to restore and preserve balance. This remains the
01:15purpose of the Bretton Woods institutions. Yet everywhere we look across the international
01:22system today, we see imbalance. The good news, it doesn't have to be this way. My goal this morning
01:30is to outline a blueprint to restore equilibrium to the global financial system and the institutions
01:37designed to uphold it. I have spent the bulk of my career from the outside looking in on financial
01:44policy circles. Now I am on the inside looking out. I am eager to work with each of you to restore
01:52order to the international system. To achieve this, however, we must first reconstruct the IMF and World Bank
02:02with or reconnect the IMF and the World Bank with their founding missions. The IMF and World Bank have
02:10enduring value. But mission creep has knocked these institutions off course. We must enact key reforms
02:18to ensure the Bretton Woods institutions are serving their stakeholders, not the other way around.
02:25Bringing balance back to global finance will require clear-eyed leadership from the IMF and World Bank.
02:34This morning, I will explain how they can provide that leadership to build safer, stronger, and more
02:42prosperous economies all around the world. I wish to invite my international counterparts to join us in
02:50working toward these goals. On this point, I wish to be clear. America first does not mean America alone.
02:59To the contrary, it is a call for deeper collaboration and mutual respect among trade partners. Far from
03:09stepping back, America first seeks to expand U.S. leadership and international institutions like the IMF and the
03:18World Bank. By embracing a stronger leadership role, America first seeks to restore fairness to the international
03:28economic system. Nowhere is the imbalance I mentioned earlier more obvious than in the world of trade.
03:37That's why the United States is taking action now to rebalance global commerce. For decades, successive
03:45administrations relied on faulty assumptions that our trading partners would implement policies that would
03:53drive a balanced global economy. Instead, we face the stark reality of large and persistent U.S. deficits
04:02as a result of an unfair trading system. Intentional policy choices by other countries have hollowed out
04:10America's manufacturing sector and undermined our critical supply chains, putting our national and economic
04:18security at risk. President Trump has taken strong actions to address these imbalances and the negative
04:26impacts they have on Americans. The status quo of large and persistent imbalances is not sustainable. It is not
04:36sustainable for the United States and ultimately it is not sustainable for other economies. Now, I know
04:43sustainability is a popular term around here, but I'm not talking about climate change or carbon
04:49footprints. I'm talking about economic and financial stability, the kind of sustainability that raises
04:57standards of living and keeps markets afloat. International financial institutions must be singularly focused on
05:06and upholding this kind of sustainability if they are to succeed in their missions. In response to President
05:14Trump's tariff announcements, more than 100 countries have approached us, wanting to help rebalance global trade.
05:23These countries have responded openly and positively to the President's actions to create a more balanced
05:29international system. We are engaged in meaningful discussions and look forward to talking with others.
05:37China, in particular, in particular is in need of a rebalancing. Recent data shows the Chinese economy
05:46tilting even further away from consumption toward manufacturing. China's economic system with growth driven by
05:54manufacturing exports will continue to create even more serious imbalances with its trading partners if the
06:02status quo is allowed to continue. China's current economic model is built on exporting its way out of its economic troubles.
06:11It's an unsustainable model that is not only harming China, but the entire world.
06:17China needs to change. The country knows it needs to change. Everyone knows it needs to change.
06:24China needs to change. And we want to help it change because we need rebalancing too. China can start by moving
06:32its economy away from export overcapacity and towards supporting its own consumers and domestic demand.
06:40Such a shift would help with global rebalancing that the world desperately needs.
06:46Of course, trade is not the only factor in broader global economic imbalances.
06:52The persistent over-reliance on the United States for demand is resulting in an ever more unbalanced global economy.
07:02Some countries' policies encourage excess savings, which holds back private sector-led growth.
07:10Others keep wages artificially depressed, which also suppresses growth.
07:15These practices contribute to global dependence on U.S. demand to spur growth.
07:23They also lead to a global economy that is weaker and more vulnerable than it should be.
07:29In Europe, former ECB President Mario Draghi has identified several sources of stagnation,
07:37and he has outlined several recommendations to get the European economy back on the right track.
07:45European countries would do well to take his recommendations to heart.
07:50Europe has already taken some long-overdue initial steps that I applaud.
07:56These steps create a new source of global demand and also involve Europe stepping up on the security front.
08:04I believe global economic relationships should come to reflect security partnerships.
08:11Security partners are more likely to have compatible economies structured for mutually beneficial trade.
08:19If the United States continues offering security guarantees and open markets,
08:25then our allies must step up with stronger commitments to shared defense.
08:31The initial actions from Europe on increased fiscal and defense spending are proof that the Trump administration's policies are indeed working.
08:40The Trump administration and the U.S. Treasury are committed to maintaining and expanding U.S. economic leadership in the world.
08:50This is especially true at the international financial institutions.
08:55The IMF and World Bank serve critical roles in the international system, and the Trump administration is eager to work with them so long as they can stay true to their missions.
09:10And under the status quo, they are falling short.
09:13The Bretton Woods institutions must step back from their sprawling and unfocused agendas, which have stifled their ability to deliver on their core mandates.
09:24Going forward, the Trump administration will leverage U.S. leadership and influence at these institutions and push them to accomplish their very important mandates.
09:36The United States will also demand that the management and staffs of these institutions be accountable for demonstrating real progress.
09:46I invite all of you to join us in working to refocus these institutions on their core missions.
09:54It is in our collective interest to do so.
09:58The IMF.
10:00First, we must make the IMF the IMF again.
10:04The IMF's mission is to promote international monetary cooperation, facilitate the balanced growth of international trade, encourage economic growth, and discourage harmful policies like competitive exchange rate depreciation.
10:20These are crucially important functions to support the U.S. and global economies.
10:26Instead, the IMF has suffered from mission creep.
10:31The IMF was once unwavering in its mission of promoting global monetary cooperation and financial stability.
10:41Now it devotes disproportionate time and resources to work on climate change, gender, and social issues.
10:49These issues are not the IMF's mission.
10:53And the IMF's focus in these areas is crowding out its work on critical macroeconomic issues.
11:01The IMF must be a brutal truth-teller and not just to some members.
11:07Today, the IMF has been whistling past the graveyard.
11:14Its 2024 external sector report was entitled, Imbalances Receding.
11:20This Pollyannish outlook is symptomatic of an institution more dedicated to preserving the status quo than answering the hard questions.
11:30Here in the United States, we know we need to get our fiscal house in order.
11:36The last administration ran up the largest peacetime deficit in our nation's history.
11:43The current administration is committed to fixing this.
11:48We are open to critique, but we will not abide the IMF failing to critique the countries that most need it, principally surplus countries.
11:59In line with its core mandate, the IMF needs to call out countries like China that have pursued globally distorted policies and opaque currency practices for many decades.
12:11I also expect the IMF to call out unsustainable lending practices by certain creditor countries.
12:18The IMF should push more proactively official bilateral lenders to come to the table early to work with borrower countries to minimize periods of debt distress.
12:33The IMF must refocus its lending on addressing balance of payment problems, and its lending should be temporary.
12:43When done responsibly, IMF lending is at the very core of its contribution to the global economy.
12:51When markets fail, the IMF steps in and makes resources available.
12:57In exchange, countries implement economic reforms to resolve their balance of payments issues and support economic growth.
13:07The reforms undertaken during these programs are some of the IMF's most important contributions to a strong, sustainable, and balanced global economy.
13:20Argentina is a fitting example.
13:23I was in Argentina earlier this month to demonstrate the United States support for the IMF efforts to help the country reset financially.
13:35Argentina deserves the IMF support because the country is making real progress toward meeting financial benchmarks.
13:44But not every country is so deserving.
13:47The IMF must hold countries accountable for implementing economic reforms.
13:53And sometimes, sometimes the IMF needs to say no.
13:58The organization has no obligation to lend to countries that fail to implement reforms.
14:05Economic stability and growth should be the markers of the IMF's success.
14:11Not how much money the institution lends out.
14:16World Bank.
14:18Like the IMF, the World Bank must be made fit for purpose again.
14:24The World Bank Group helps developing countries grow their economies, reduce poverty, increase private investment support, private sector job creation, and reduce dependence on foreign aid.
14:39It offers transparent and affordable long-term financing for countries to invest in their own development priorities.
14:48The bank, along with the fund, provides extensive technical support to promote debt sustainability among low-income countries, which empowers those countries to stand up to coercive and opaque lending terms from other creditors.
15:06These core functions of the World Bank complement the Trump administration's efforts to foster safer, stronger, and more prosperous economies in the United States and the world.
15:19But the bank, like the IMF, has strayed in certain respects from its initial mission.
15:26The bank should no longer expect blank checks for vapid, buzzword-centric marketing accompanied by half-hearted commitments to reform.
15:35As the bank returns to its core mission, it must use its resources as efficiently and effectively as possible.
15:44And it must do so in ways that demonstrate tangible values for all member countries.
15:51The bank can use its resources more efficiently now by focusing on increasing energy access.
15:58Business leaders the world over identify unreliable power supply as one of the primary impediments to investment.
16:08The world bank and African development banks joint mission 300 initiative to expand energy access to 300 million more people in Africa is a welcome effort.
16:21But the world bank must respond to countries' energy priorities and needs and focus on dependable technologies that can sustain economic growth rather than seek to meet distortionary climate finance targets.
16:38We applaud the recent announcement that the world bank will seek to remove prohibitions on support for nuclear energy, which could revolutionize energy supply for many emerging markets.
16:52We encourage the bank to go further in giving countries access to all technologies that can provide affordable baseload generation.
17:01The world bank must be tech neutral and prioritize affordability and energy investment.
17:08In most cases, this means investing in gas and other fossil fuel based energy production.
17:15In other cases, this may mean investing in renewable energy coupled with systems to help manage the intermittency of wind and solar.
17:25The history of humanity teaches a simple lesson.
17:29Energy abundance sparks economic abundance.
17:35That's why the bank should encourage an all of the above approach to energy development.
17:42Such an approach will make World Bank financing more effective and it will reconnect the bank to its core mission of economic growth and poverty alleviation.
17:55In addition to increasing energy access, the World Bank can use its resources more effectively by starting to apply its graduation policy.
18:06This would allow the bank to focus on lending to poorer, less creditworthy countries.
18:13This is where World Bank support makes the biggest difference for poverty and growth.
18:19Instead, the World Bank continues to lend every year to countries that have met the criteria to graduate from World Bank borrowing.
18:28There is no justification for this continued lending.
18:32It siphons off resources from higher priorities and crowds out the development of private markets.
18:39It also disincentivizes countries' efforts to move away from dependency on the World Bank and toward job-rich private sector-led growth.
18:50Going forward, the bank must set firm graduation timelines for countries that have long since met the graduation criteria.
19:01Treating China, the second largest country in the world, as a developing country is absurd.
19:08While it has been at the expense of many Western markets, China's rise has been rapid and impressive.
19:16If China wants to play a role in the global economy, commensurate with its actual importance, then the country needs to graduate up.
19:25We welcome that.
19:27The World Bank should also implement transparent procurement policies based on best value.
19:34It must help countries move away from procurement approaches that prioritize only the lowest-cost bids.
19:42Such procurement policies reward distortive and subsidized industrial policies that undermine development.
19:50They may also stifle the private sector and incentivize corruption and collusion and result in greater long-term costs.
20:00Procurement policies based on best value are better from both an efficiency and development perspective,
20:08and their robust implementation will benefit the bank and its shareholders.
20:14Related to this subject, I wish to send a strong, and I emphasize strong message about procurement policies as regards Ukraine.
20:24No one who financed or supplied the Russian war machine will be eligible for funds earmarked for Ukraine's reconstruction.
20:33No one.
20:35To conclude, I invite our allies to work with us as we rebalance the international financial system, refocus the IMF and World Bank on their founding charters.
20:47America first means we are doubling down on our engagement with the international economic system, including at the IMF and the World Bank.
20:57A more sustainable economic system will be one that better serves the interests of the United States and all the other participants in the system.
21:06We look forward to working with all of you in this endeavor.
21:18Good job. Thank you.
21:19Mr. Secretary, thank you for joining us here today, and thank all of you for coming here today.
21:28I'm going to point out that you have many great lines in this very meaty and comprehensive set of remarks, but you say,
21:34I wish to be clear, America first does not mean America alone.
21:38To the contrary, far from stepping back, you seek to expand U.S. leadership and international institutions like the IMF and the World Bank.
21:44I must say, there's a collective sigh relief across this town right now, because the concern coming into this week is that you were going to do exactly what you said you're not going to do,
21:52which is the U.S. withdrawal, but you want to lead.
21:55What you're asking for is simply getting back to factory settings, right?
21:59Focused approach and deal with the issues that you see are most paramount, correct?
22:04Correct.
22:05As I said in my confirmation hearings, I think U.S. engagement with the international financial multilateral institutions,
22:13we should engage and we should be in it to win it for the American people and for the rest of the countries and for the client countries.
22:25Twenty years ago, a senior U.S. Treasury official gave a speech very similar to this,
22:30calling on the IMF and said the IMF was asleep at the wheel and dealing with imbalances.
22:34Hank Paulson started the Strategic Economic Dialogue with the Chinese.
22:38Every Treasury Secretary since then have had an approach.
22:41So how will you do this differently and how do you think that you'll proceed in this approach?
22:46What is your philosophy?
22:47What is your tools and how will you execute on this?
22:51Well, look, I think that our moves toward reordering the financial or trading system is a start.
23:02I think that today, as I reaffirm our engagement, but set up a list of core principles and back to basics for the institutions.
23:13And again, being from the private sector, we want to see results.
23:20And we want to see timelines that, as you and I were talking about backstage, global rebalancing has been a topic for more than 20 years.
23:33And some countries may have a hundred year perspective. We don't.
23:41Right. China, obviously, is an important part of this administration's form and economic policy.
23:48You'll be meeting with your Chinese counterparts.
23:51What will you tell them in the sense of how they, they obviously are aware that there's huge imbalances.
23:56Their manufacturing capacity is enormous, especially things like automobiles.
23:59How will you help them understand that it's not just about talking, it's about executing?
24:05Well, look, I don't think I have to help them understand.
24:08I think they understand very well.
24:12And it's just a matter of impetus and will.
24:17So I believe I first went to Japan in 1990, 91, within 12 months of the peak of the bubble, a decade of that unwind, a decade of malaise.
24:32And then in 2012, I ran across 2011, he was running for prime minister named Shinzu Abe.
24:43And he knew that Japan needed change and implemented it very quickly.
24:49Ten years later, more than ten years later, Japan has had a remarkable economic run.
24:54And I think that they are Chinese counterparts that will come to this realization.
25:03And some of our policies, sometimes it takes an external push.
25:09Right.
25:10Alternatively, what I have said previously, there is an opportunity for a big deal here.
25:19That the U.S. is looking to rebalance two more manufacturing.
25:25The identity of that would be less consumption.
25:29If China is serious on less dependence on export-led manufacturing growth and a rebalancing toward a domestic economy.
25:41I think they use the term dual circulation.
25:44Well, right now it's really singular circulation.
25:48And if they want to rebalance, let's do it together.
25:52This is an incredible opportunity.
25:55I think if Bridgewater founder Ray Dalio were to write something, he could call it a beautiful rebalancing.
26:03Indeed.
26:05But a big part of that will also be our own fiscal imbalance.
26:09And as you mentioned, we're running 6% of GDP at the top of the cycle.
26:14Not sustainable, as you yourself have pointed out.
26:17How important is it to also address our fiscal imbalance as part of this larger rebalancing?
26:22Well, it's very important that I think most people in this room are trained economists and everyone knows that a trade deficit emanates from three things.
26:36External trade policies, which we are intent on addressing.
26:43External trade policies can be tariffs, non-tariff barriers, currency manipulation, and the subsidy of, state subsidy of labor and means of production.
26:55So trade, terms of trade, or trade regulation is one.
27:02Two is our budget deficit.
27:06So the larger our deficit, the more it creates a demand suck, also pushes up the interest rates.
27:17And then three, the level of the dollar.
27:20The US, we continue to have a strong dollar policy, and the dollar will adjust based on markets.
27:32Everyone asks me, well, what does a strong dollar mean?
27:36And to me, the strong dollar means having the policies in place to deserve capital flows and have confidence.
27:46But it doesn't mean the price on the Bloomberg screen every day.
27:51And it also has different meanings in terms of bilateral prices.
27:58So it's really three-pronged.
28:01But Tim, to your question, I have talked about we did not get here quickly with the spending.
28:11The US does not have a revenue problem.
28:14We have a spending problem.
28:16And I have suggested when I first met President Trump to talk about joining his campaign two years ago
28:25that we need to get back to a long-term sustainable budget deficit of something with the three in front of it, which works.
28:37We have 2% nominal growth or 2% inflation, projected 1.8% growth, which I think could be much higher if we implement our economic policies.
28:48You reaffirmed the strong dollar policy first articulated by Bob Rubin.
28:52Robert Rubin, Valerie Giscard is saying in the 1960s, talked about the US exorbitant privilege of the dollar.
28:58There are some in this town who question that privilege and actually see it as a burden.
29:01Do you see it as a privilege?
29:03That the US sits at the center of the global economy is enabled by the use of dollars.
29:18And that it's natural that the usage would come down over time.
29:24And I think that the US will always, for my lifetime, be the reserve currency.
29:31I actually am not sure that anyone else wants it.
29:36I can't remember.
29:37One of the European officials said today, maybe it was Mr. De Guindos, I can't remember, said,
29:44oh, well, the euro could become a second reserve currency.
29:48Well, we've just had a substantial appreciation in the euro for export economies.
29:55It's a lot of pressure.
29:58And look, I think that the reaffirming our belief in these international institutions is also part of that.
30:10You mentioned the euro.
30:11You mentioned in your comments Mario Draghi's report from last year.
30:14There was the letter report.
30:15Before that, I've been spending a lot of time in Europe.
30:17There does seem to be a much more buoyant atmosphere in Europe.
30:22They see this as an opportunity for them.
30:25I said something about a postural renaissance.
30:27I was heckled a bit, but I actually am pretty positive on Europe.
30:30Do you think this is an opportunity to shift some of that demand?
30:33The world has relied on US final demand to shift some of that demand for Europe.
30:37Is this a positive time for Europe?
30:40Look, I think it can be.
30:42And it wasn't in a straight line.
30:45It wasn't always the way a trained diplomat would have done.
30:51But I think we should all congratulate President Trump.
30:54He has done what a succession of European leaders have tried to do for the past 26 years.
31:01Since the advent of the euro, whether it's the French, the Italians, other European countries have tried to get Germany to increase their fiscal spend and drive the European economy.
31:20I think that I applaud these nascent efforts because it's a combination.
31:27It's a combination of economic stimulus and it is a combination of burden sharing on the European continent for defense.
31:38As I said many times before, economic security is national security.
31:43National security is economic security.
31:46So, if this European plan works, I applaud it.
31:53I had a private meeting with the Spanish finance minister last week, two weeks ago.
32:00And he said, you're going to be pleasantly surprised with where we go on military spending.
32:08And this 2% number today, he was right.
32:12So, you're already taking on these tasks.
32:15You have China, more consumption, less investment deal with their manufacturing excess capacity.
32:19Europe is a great opportunity.
32:21The U.S. rebalancing here, including on fiscal.
32:23So, what do you want the IMF to do?
32:25What would you like to hear from Kristalina over the next couple of days or the board in the new direction?
32:31Again, back to factory settings direction.
32:33What do you want to hear from them?
32:35Well, again, I think it's just been mission creep.
32:39Yeah.
32:40And just occasionally you have to trim your garden when the weeds grow.
32:44And I think that it's back to basics.
32:49What are our priorities?
32:51And how are we going to judge success?
32:54And the World Bank, you discussed about graduating the medium-sized countries that should have graduated some time ago.
33:01That changes the commercial model of the World Bank.
33:04But obviously, you think that's important.
33:07They need to be graduated.
33:08Yes.
33:09Yeah.
33:10I mean, it's just, as President Trump says, it's common sense.
33:13That you can't have the second largest economy in the world.
33:18And they, as I said in my speech, I applaud their rapid growth, but you don't get both.
33:26I have a teenager who sometimes wants to be treated like a child, sometimes wants to be treated like an adult.
33:34Yeah.
33:35I got one of those, too.
33:36Yeah.
33:37It's an adult economy.
33:41You mentioned energy, specifically nuclear, during the campaign.
33:45And since you've become secretary, you've talked about energy production is one of your important legs.
33:51The U.S. produces about 13 million barrels of oil a day.
33:54The largest producer in the world.
33:56What more do we need to do here?
33:57And how can the World Bank, what do they need to do more to encourage fossil fuels as well as nuclear?
34:02And I assume all of the above.
34:04Yeah.
34:05Look, the sine qua non for economic growth is energy abundance.
34:14And we need to drive the right combination of the crawl, walk, run for these countries in charge in terms of sustainable production.
34:30But by sustainable, I mean robust and base load, not what I would call almost a luxury belief that we have in the West.
34:42They are worried about pumping water.
34:44They are worried about heating their homes, running their hospitals.
34:49And we've seen that the intermittency doesn't work.
34:55Even kind of in middle developed countries, maybe like South Africa, that seems to have rolling blackouts.
35:05Right.
35:06So that's not a model.
35:08We want to have a model of strong base load and then bolting on the alternative production as opposed to beginning with alternative production and then having this latency or intermittency that makes it impossible to industrialize.
35:27In the final minute or two, let me just turn to financial intermediation.
35:31You know, there's a famous adage that capitalism without capital is just another ism.
35:35The institutions you see here are important intermediaries, both in the capital markets and other forms of financial intermediation.
35:41What is your vision, especially for the U.S. in terms of financial regulation?
35:45What do you want the industry to look like?
35:47Obviously, the capital markets, the U.S. is the crown jewel of this economy.
35:50How should we encourage that not only here but abroad?
35:53Well, look, I think that I've been getting a lot of questions on private credit.
36:01And I think that private credit is an interesting addition to the U.S. mosaic.
36:11And it is the depth and breadth of our capital and credit markets that powers the U.S. economy.
36:20And it's the innovation there.
36:24I think that private credit is a very new and interesting part, but it is happening outside of the regulated ecosystem.
36:33Right.
36:34And I always like to say I'm not an economist.
36:36I'm an economic historian.
36:38And I think that is a distortion of the system.
36:43And it tells me that the post-2008 regulatory corset is too tight on the regulated institutions.
36:54And we want to deregulate them or make them more able to provide the opportunity to lend to the American economy and perhaps into the international economy in a smart, safe and sound way.
37:13As we've seen, the history of financial crises is a overreaction on one side.
37:23And I think that we had a regulatory overreaction.
37:26I convened something in the U.S. called FSTOC, the Financial Stability Oversight Council, which convenes the regulators.
37:35And I think through partnership with the three U.S. banking regulators of Federal Reserve, controller of the currency, and the FDIC, we can come up with a system that makes the regulated financial system prosper again.
37:55And what the U.S. has that is different than most other G7 countries is just the number of financial institutions.
38:05We don't have five big banks, three big banks.
38:08And in the U.S., the community and small banks, which provide 70 percent of agricultural lending, 40 percent of small business lending, 40 percent of real estate lending.
38:22And in the U.S., we've had this incredible boom on Wall Street.
38:28I think Wall Street can continue doing well.
38:31But I think it's Main Street's turn to share in the prosperity.
38:35And I think it was the pullback by the small banks, the opposed to GFC, that's kind of created this stagnation on Main Street.
38:45And we're determined to fix that.
38:48Mr. Secretary, I always say, Treasury is the sober voice of reason.
38:51What we've heard today from you is a sober voice of reason.
38:53We wish you all the best.
38:54Ladies and gentlemen, a round of applause for Treasury Secretary.