U.S. Treasury Secretary Steven Mnuchin on Saturday called on the International Monetary Fund to enhance surveillance of its members’ exchange rates and external imbalances, as large trade imbalances would hamper “free and fair” trade.
Mnuchin said the global economy continues to exhibit large and persistent external imbalances, “which contribute to the sentiment that the existing international monetary and trading system does not benefit all.”
“In our view, excessively large trade surpluses, like excessively large trade deficits, are not conducive to supporting a free and fair trading system,” he said in a statement to the International Monetary and Financial Committee, the IMF’s steering committee.
U.S. President Donald Trump has threatened to impose measures to restrict imports, and attacked countries like China, Germany and Japan for running large trade surpluses with the United States and benefiting from weak currencies.
Mnuchin called on countries with large external surpluses and sound public finances—likely a reference to Germany—to expand fiscal stimulus to boost growth and help narrow trade imbalances.
He also urged the IMF to scrutinizes its member nation’s exchange rates and identify “specific policy adjustments” for each country to counter global imbalances.
“We look to the IMF to highlight where surplus countries can more forcefully contribute to support symmetric adjustment in pursuit of a fairer global system,” he said.
Mnuchin also urged countries to abide by their exchange-rate commitments, such as to refrain from competitive devaluation, not use monetary policies to target exchanges rates for competitive purposes, and to consult closely on exchange rates.