Yellen Heads to G-20 Meetings in Rio Amid US Political Tensions

Treasury Secretary Janet Yellen will join finance ministers from the Group of 20 nations in Rio de Janeiro this week for a series of meetings addressing pressing global issues. However, US political dynamics are likely to influence these discussions, especially with the increasing momentum of former President Donald Trump’s campaign to reclaim the White House.

Implications of a Potential Trump Administration

With Trump’s bid gaining traction, many international officials may have to contend with the possibility of Washington reducing its engagement with multilateral organizations. This includes groups like the G-20. The Treasury’s top international deputy, Jay Shambaugh, hinted at this issue in comments to reporters on Friday. He stated, “Under President Biden and Secretary Yellen’s leadership. The United States has renewed our commitment to global engagement, rather than turning inward.”

Support for Ukraine and Continuity on China Policy

In Brazil, Shambaugh mentioned that Yellen would reaffirm the Biden administration’s support for Ukraine in its conflict with Russia. This is another policy area that could see significant changes if Trump wins in November. However, one policy likely to remain unchanged is Washington’s stringent stance on China. During this week’s meetings, Yellen is expected to continue voicing Washington’s objections to China’s reliance on exports and substantial subsidies for its manufacturing sector. She has repeatedly cautioned that China’s overcapacity threatens to inundate global markets with artificially low-priced goods. This, she warns, undermines industries in the US and worldwide.

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Tariff Increases and Encouraging Allies

In May, Biden increased tariffs on various Chinese-made products, with Yellen spearheading efforts to encourage US allies to take similar actions. In Rio, she may urge emerging market countries to express their concerns over Chinese exports. Responding to reporters’ inquiries, a senior Treasury official noted that some emerging markets, including Brazil and India, had already shown their dissatisfaction. These countries had implemented measures to protect their industries from Chinese imports.

Diplomatic Balancing Act

Most emerging market countries have generally avoided criticizing Beijing to prevent diplomatic repercussions. In contrast, the US and its key industrialized partners have adopted increasingly assertive language regarding China. This shift is reflected in a Group of Seven communique from May. Should the Brazilians or Indians adopt a more vocal stance, it would represent a significant triumph for the US. This is according to Josh Lipsky, director of the Washington-based Atlantic Council’s GeoEconomics Center. “I see the US attempting to persuade the Brazilians and Indians to adopt this viewpoint,” Lipsky said. “The question is whether they can get the major emerging market countries to make a public statement.”

Agenda and Future Engagements

Yellen’s itinerary includes a press conference at 8 a.m. New York time on July 25. The group meetings will also address several key issues. These include the delayed implementation of a global tax agreement reached three years ago, debt relief for low-income countries, and reforms to multilateral development banks. On July 27, Yellen will attend a gathering hosted by the Inter-American Development Bank in Belem, a city in northern Brazil. There, she will deliver a speech on the Biden administration’s climate change policies.

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