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    Threats, delays and confusion: 10 key points to understand another week of Trump tariff turmoil

    Donald Trump ramped up his trade rhetoric this week, firing off more than 20 letters to governments outlining new tariff rates if agreements aren’t reached by 1 August.In April, Trump announced a 10% base tariff rate and additional duties ranging up to 50% for many other countries, although he later delayed the effective date for all but 10% duties until 9 July after market panic.Trump officials initially suggested they would strike dozens of deals with key economies by the 9 July deadline, but as the 90-day pause ended this week, the president announced a range of new rates for various countries, but delayed their implementation until next month.Here’s what’s happened:

    Trump informed powerhouse suppliers Japan, South Korea and a number of other nations at the start of this week that they will face tariffs of at least 25% starting from August unless they can quickly negotiate deals.

    On Wednesday he announced more tariffs on countries like the Philippines, Sri Lanka and Algeria, as well as a 50% tariff on products from Brazil, tying the move to what he called the “witch-hunt” trial against its former president, Jair Bolsonaro. Trump criticised the trial Bolsonaro is facing over trying to overturn his 2022 election loss. Brazil’s president, Luiz Inácio Lula da Silva, threatened to hit back with reciprocal 50% tariff on US goods.

    On Thursday, Trump announced the US would impose a 35% tariff on imports from Canada, despite ongoing negotiations and prime minister Mark Carney’s decision last month to rescind a digital services tax that faced criticism from the US president. Carney said his government would continue to defend Canadian workers and businesses in their negotiations and work towards the 1 August deadline.

    Trump also said on Thursday that a letter would be sent to the European Union, the US’s biggest trading partner, “today or tomorrow”. Last week the EU and US were closing in on a high-level “framework” trade deal that would avert 50% tariffs on all exports from the bloc.

    The steep tariff rates announced throughout the week range from 25-50%, with some of the harshest levies imposed on developing nations in south-east Asia, including 32% for Indonesia, 36% for Cambodia and Thailand and 40% on Laos and Myanmar, a country riven by years of civil war.

    On his first official visit to Asia, US secretary of state Marco Rubio sought to reassure regional powers of Washington’s commitment to them, saying countries there may get “better” trade deals than the rest of the world. Prior to Rubio’s arrival in Kuala Lumpur, Malaysian prime minister Anwar Ibrahim condemned the tariffs at the opening of an Asean foreign ministers’ meeting.

    Trump has also vowed to implement tariffs of up to 200% on foreign drugs and 50% on copper. Copper prices hit a record high in the US after the announcement.

    US treasury secretary Scott Bessent said he expected several trade announcements this week, but to date the US has secured just two deals with trading partners. The first with the UK, signed on 8 May, includes a 10% tariff on most UK goods, including cars, and zero tariffs for steel and aluminium. A second deal was reached with Vietnam last week that sets a 20% tariff for much of its exports, although the full details are unclear, with no text released.

    On Thursday, Trump said the tariffs had been “very well-received”, adding that the stock market “hit a new high today”.

    Global stock markets have largely shrugged off the latest threats. Analysts say traders now expect a deal or another delay, while investors appear to be waiting until a deal is done or the tariffs kick in. More

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    Lobbyists linked to Donald Trump paid millions by world’s poorest countries

    Some of the world’s poorest countries have started paying millions to lobbyists linked to Donald Trump to try to offset US cuts to foreign aid, an investigation reveals.Somalia, Haiti and Yemen are among 11 countries to sign significant lobbying deals with figures tied directly to the US president after he slashed US foreign humanitarian assistance.Many states have already begun bartering crucial natural resources – including minerals – in exchange for humanitarian or military support, the investigation by Global Witness found.USAID officially closed its doors last week after Trump’s dismantling of the agency, a move experts warn could cause more than 14 million avoidable deaths over five years.Emily Stewart, Global Witness’s head of policy for transition minerals, said the situation meant that deal making in Washington could become “more desperate and less favourable to low-income countries”, which had become increasingly vulnerable to brutal exploitation of their natural resources.Documents show that within six months of last November’s US election, contracts worth $17m (£12.5m) were signed between Trump-linked lobbying firms and some of the world’s least-developed countries, which were among the highest recipients of USAID.Records submitted under the US Foreign Agents Registration Act reveal some countries signed multiple contracts, including the Democratic Republic of the Congo (DRC), which has endured mass displacement and conflict over its mineral wealth for years.The DRC is primed to sign a mineral deal with the US for support against Rwanda-backed rebels, providing American companies access to lithium, cobalt and coltan.The DRC – a former top-10 USAID recipient – signed contracts worth $1.2m with the lobbyists Ballard Partners.The firm, owned by Brian Ballard, lobbied for Trump well before the 2016 US election and was a leading donor to the US president’s political campaign.Somalia and Yemen signed contracts with BGR Government Affairs – $550,000 and $372,000 respectively.A former BGR partner, Sean Duffy, is now Trump’s transport secretary, one of myriad links between the US president and the lobbying firm.The government of Pakistan, a country that struggles with extreme poverty but is extremely rich in minerals, has signed two contracts with Trump-linked lobbyists worth $450,000 a month.Pakistan is now tied up in deals with multiple individuals in Trump’s inner circle, including the president’s former bodyguard Keith Schiller.Access to key natural resources has become a priority for Trump, particularly rare earth minerals. These are considered critical to US security, but the global supply chains for them are dominated by China.Other nations are offering exclusive access to ports, military bases and rare earths in exchange for US support.Although Global Witness said the revolving door between governments and lobbyists was nothing new, the organisation said it was concerned by the broader, exploitative dynamics driving new deals.Stewart said: “We’re seeing a dramatic cut in aid, combined with an explicit rush for critical minerals, and willingness by the Trump administration to secure deals in exchange for aid or military assistance.“Dealmaking needs to be transparent and fair. It is vital to recognise the role that international aid plays in making a safer world for all, and that aid should retain its distinct role away from trade.” More

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    Tourists from countries badly hit by Trump tariffs are staying away from US

    Holidaymakers in countries hit the hardest by Donald Trump’s trade tariffs are taking the US off their list for trips abroad, according to online travel booking data.Findings from the hotel search site Trivago also suggest that UK and US travellers are increasingly choosing domestic holidays amid concerns over an uncertain economy.The company has seen double-digit percentage declines in bookings to the US from travellers based in Japan, Canada and Mexico. The latter two countries were the first on Trump’s tariff hitlist when he announced tariffs of 25% on 1 February.Canadians in particular were incensed at Trump’s repeated suggestions that its northern neighbour would be better off annexed as the 51st state of the US.According to Trivago’s findings, which were shared with PA Media, demand among Germans was also “down heavily”, with hotel bookings in the US showing a single-digit percentage decline.Germany is the largest economy in the EU, which Trump has repeatedly threatened with increased tariffs, most recently saying on Sunday he had “paused” a 50% tax he intended to introduce next month.There has not been a significant change in the numbers of UK holidaymakers travelling to the US. The UK has so far faced some of the lightest tariffs globally and last month struck a “breakthrough” trade deal with the US.Businesses operating in its $2.6tn tourism industry are becoming increasingly concerned about a “Trump slump” due to the turmoil the president’s tariff war is causing on the global economy.Last month, the federal government’s National Travel and Tourism Office released preliminary figures showing visits to the US from overseas fell by 11.6% in March compared with the same month last year.Bookings made via Expedia-owned Trivago also show that Americans are spending less on their trips, while there is higher demand for cheaper hotels and lower star categories.skip past newsletter promotionafter newsletter promotionTrump has levied tariffs on more than 180 countries, but has paused many of his tariffs for periods of up to 90 days while governments seek to negotiate deals.Recent booking data shows that in the UK there has been a 25% year-on-year leap in demand for domestic travel for the important months of July to September.“In times of uncertainty, people stay closer to home,” said Johannes Thomas, chief executive of Trivago.Trivago’s research has shown that London is the top destination for British tourists, followed by Edinburgh, where demand is up by nearly 30%, then York, Blackpool and Manchester. More

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    Trump says he is hitting EU with 50% tariff as trade talks are ‘going nowhere’

    Donald Trump has said he will impose a 50% tariff on all EU imports to the US from 1 June after claiming trade talks between the two trading blocs were “going nowhere”.In a surprise announcement, the US president posted on his Truth Social platform that his long-running battle to secure concessions from the EU had stalled.He accused the EU of taking advantage of the US on trade, saying: “Our discussions with them are going nowhere! Therefore I am recommending a straight 50% Tariff on the European Union, starting on June 1, 2025.”Speaking to reporters in the Oval Office, Trump claimed the EU had “taken advantage” of the US and claimed the new tariffs would be imposed unless EU companies moved their operations to the US.“It’s time that we play the game the way I know how to play the game,” said Trump.Stock markets slumped in response to the news, the tech-heavy Nasdaq closed down 1% as Trump also signalled plans to impose tariffs on Apple, Samsung and other phone manufacturers. The broader S&P 500 lost 0.68%. The STOXX Europe 600 index fell by 1.7%. In London the FTSE 100 closed down 0.2% after initially dropping as much as 1.5%. Germany’s car makers were particularly hard hit, with BMW down 3.7%, Volkswagen off 2.6% and Mercedes-Benz down 4%.The US imposed a 20% “reciprocal” rate on most EU goods on 2 April, but halved that rate a week later until 8 July to allow time for talks. It has retained 25% import taxes on steel, aluminium and vehicle parts and is threatening similar action on pharmaceuticals, semiconductors and other goods.skip past newsletter promotionafter newsletter promotion“This is a major escalation of trade tensions,” said Holger Schmieding, the chief economist at Berenberg, on Friday. “With Trump you never know but this would be a major escalation. The EU would have to react and it is something that would really hurt the US and European economy.”EU negotiators have been locked in meetings with White House representatives since Trump’s so-called “liberation day” tariffs were first announced. Dozens of countries have been holding discussions to try to bring down their own levies before the 90-day pause elapses.The White House has relented on many of its most onerous tariffs, including lowering total tariffs on Chinese goods from 145% to 30% after what Trump declared were constructive talks with Beijing, which lowered its retaliatory border taxes from 125% to 10% in response.A week ago the US president appeared to acknowledge that Washington lacked the ability to negotiate deals with scores of countries at once, saying the US would instead send letters to some trading partners to unilaterally impose new tariff rates.Perceptions of an easing back on a hardline approach to trade brought a period of calm to stock markets, but Friday’s threat of a 50% levy on EU goods, plus a separate threat made the same day of 25% tariffs on iPhones made abroad, have brought an end to the peace.The EU presented a fresh trade proposal to the US on Thursday. The offer included phased tariff cuts on non-sensitive goods, plus cooperation on energy, AI and digital infrastructure. The bloc was readying about $108bn in retaliatory tariffs if talks failed.To sweeten the deal, EU officials were also willing to extend a 2020 tariff-free arrangement on US lobster imports, according to the Financial Times. But it appears to have proved insufficient to persuade the US president to sign a deal allowing only his 10% universal tariff to apply to the EU, as it does the UK. More

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    China and US agree 90-day pause to trade war initiated by Donald Trump

    China and the US have agreed a 90-day pause to the deepening trade war that has threatened to upend the global economy, with reciprocal tariffs to be lowered by 115%.Speaking to the media after talks in Geneva, the US treasury secretary, Scott Bessent, said both sides had shown “great respect” in the negotiations.Bessent said: “The consensus from both delegations this weekend was neither side wants a decoupling.”The 90-day lowering of tariffs applies to the duties announced by Donald Trump on 2 April, which ultimately escalated to 125% on Chinese imports, with Beijing responding with equivalent measures.China also imposed non-tariff measures, such as restricting the export of critical minerals that are essential to US manufacturing of hi-tech goods.The US trade representative, Jamieson Greer, said China’s retaliation had been disproportionate and amounted to an effective embargo on trade between the world’s two biggest economies.With the 115% deduction, Chinese duties on US goods will be lowered to 10%, while the US tax on Chinese goods will be lowered to 30%. That is because the US tariffs include a 20% rate imposed by Trump before the latest trade war, which the president said was related to China’s role in the US’s fentanyl crisis. The fentanyl-related tariff will still apply.A spokesperson for China’s ministry of commerce said: “This move meets the expectations of producers and consumers in both countries, as well as the interests of both nations and the common interest of the world.“We hope that the US side will, based on this meeting, continue to move forward in the same direction with China, completely correct the erroneous practice of unilateral tariff hikes, and continually strengthen mutually beneficial cooperation.”China’s yuan jumped to a six-month high on the signal that the trade war would be paused. Up to 16m jobs were at risk in China, according to some estimates, while the US faced rising inflation and empty shelves thanks to dizzying tariffs on the biggest supplier of US goods.Bessent said he was impressed by the level of Chinese engagement on the fentanyl issue during the talks in Switzerland. “For the first time the Chinese side understood the magnitude of what is happening in the US,” Bessent said.A joint statement published by the US and China on Monday said that both sides would “continue to advance related work in a spirit of mutual openness, continuous communication, cooperation and mutual respect”.William Xin, the chair of the hedge fund Spring Mountain Pu Jiang Investment Management, told Reuters: “The result far exceeds market expectations. Previously, the hope was just that the two sides can sit down to talk, and the market had been very fragile. Now, there’s more certainty. Both China stocks and the yuan will be in an upswing for a while.”skip past newsletter promotionafter newsletter promotionHu Xijin, the former editor of the nationalist Chinese tabloid the Global Times, said on social media the agreement was a “great victory for China in upholding the principles of equality and mutual respect”. Hu noted on Weibo that the recently agreed UK-US trade deal maintained the US’s 10% tariff on UK imports, “while the UK did not implement reciprocal measures”.Wang Wen, the head of the Chongyang Institute for Financial Studies at Renmin University in Beijing, said: “This is an unexpected achievement in Sino-US tariff negotiations.”However, Wang also urged caution, as he said the agreement “does not represent the resolution of the structural contradictions between China and the United States, nor does it mean that there will be no friction and serious differences between China and the United States in the future”.Stock markets across Europe rose in the aftermath of the US-China announcement. Germany’s DAX index jumped by 1.5%, with Mercedes-Benz, Daimler Trucks and BMW among the biggest risers. France’s CAC index rose by 1.2%.Additional research by Lillian Yang More

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    UK officials land in Washington as talks over trade agreement continue

    A team of senior British trade negotiators has landed in Washington as talks over a deal between the two countries gather pace.Officials from the business and trade department are in the US for much of this week, attempting to get an agreement signed before the planned UK-EU summit on 19 May.Downing Street did not deny reports the deal could be signed as early as this week, although government sources said the recent announcement by the US president, Donald Trump, of film industry tariffs had proved a significant setback.One person briefed on the talks said: “We have a senior team on the ground now, and it may be that they are able to agree something this week. But the reality is the Trump administration keeps shifting the goalposts, as you saw with this week’s announcement on film tariffs.”Another said Trump’s threat of 100% tariffs on films “produced in foreign lands”, which could have a major impact on Britain’s film industry, had “gone down very badly in Downing Street”.UK officials say they are targeting tariff relief on a narrow range of sectors in order to get a deal agreed before they begin formal negotiations with the EU over a separate European agreement. A draft deal handed to the US a week ago would have reduced tariffs on British exports of steel, aluminium and cars, in return for a lower rate of the digital services tax, which is paid by a handful of large US technology companies.The Guardian revealed last week the Trump administration had made negotiating a trade deal with the UK a lower-order priority, behind a series of Asian countries. UK officials said they have been able to continue talks with their US counterparts despite that, describing the Trump administration’s approach as “chaotic”.Officials from the trade department arrived in Washington this week hoping to reach an agreement on two outstanding issues, pharmaceuticals and films.Trump has said he will impose tariffs on both industries, mainstays of the British economy, but has not yet given details.This week, the US president said the US film industry was dying a “very fast death” because of the incentives other countries were offering to draw American film-makers, and promised to impose a 100% tariff on foreign-made films. Britain offers producers generous reliefs on corporation tax to locate their projects there, which help support an industry now worth about £2bn, with major US films such as Barbie having recently been shot in Britain.Trump also said that he planned to unveil tariffs on imports of pharmaceutical products “in the next two weeks”. The UK exported £6.5bn worth of such goods to the US last year.Keir Starmer, the prime minister, has ruled out reducing food production standards to enable more trade of US agricultural products, as officials prioritise signing a separate agreement with the EU, which is likely to align British standards with European ones.Officials are racing to sign the US agreement before the planned UK-EU summit, at which both sides will set out their formal negotiating positions. Leaked documents revealed on Wednesday the two remain far apart on their demands for a youth mobility scheme, with Britain demanding that visas issued under the scheme should be limited in number and duration, and should exclude dependents.EU ambassadors met in Brussels on Wednesday to discuss the progress of the deal. One diplomat said: “Negotiations are going well, the mood is still good but it is a bit early to see bold moves from one side or another.”This week Starmer also signed an agreement with India after giving way on a demand from Delhi for workers transferring to the UK within their companies to avoid paying national insurance while in the country.The concession has caused some unease in the Home Office, with Yvette Cooper, the home secretary, not having been told about it in advance.It was also criticised by Kemi Badenoch, who accused the prime minister of bringing in a “two-tier” tax system. The Tory leader denied reports, however, that she had agreed to the same concession when she was business secretary.The prime minister defended the deal on Wednesday, telling MPs at PMQs it was a “huge win” for the UK. Other senior Tories have also praised the deal, including Steve Baker, Oliver Dowden and Jacob Rees-Mogg, the latter of whom said it was “exactly what Brexit promised”.British officials say they have been surprised at the willingness of the Labour government to sign agreements which have been on the table for years but previously rejected by the Conservative government.With economists having recently downgraded the UK’s growth outlook, Starmer is understood to have decided to sign deals such as that with India, even though they do not include a number of British demands, such as increased access for services.One source said the approach was to clinch a less ambitious agreement and use that to build a fuller economic partnership in the coming years. More

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    Why Donald Trump’s plan to weaken the dollar is flawed | Kenneth Rogoff

    Now that US President Donald Trump’s tariff war is in full swing, investors around the world are asking: what’s next on his agenda for upending the global economic order? Many are turning their attention to the “Mar-a-Lago Accord” – a plan proposed by Stephen Miran, chair of Trump’s Council of Economic Advisers, to coordinate with America’s trading partners to weaken the dollar.At the heart of the plan is the notion that the dollar’s status as the world’s reserve currency is not a privilege but a costly burden that has played a major role in the deindustrialisation of the American economy. The global demand for dollars, the argument goes, drives up its value, making US-made goods more expensive than imports. That, in turn, leads to persistent trade deficits and incentivises US manufacturers to move production overseas, taking jobs with them.Is there any truth to this narrative? The answer is yes and no. It’s certainly plausible that foreign investors eager to hold US stocks, bonds, and real estate could generate a steady flow of capital into the United States, fuelling domestic consumption and boosting demand for tradable goods such as cars and non-tradables such as real estate and restaurants. Higher demand for non-tradable goods, in particular, tends to push up the dollar’s value, making imports more attractive to American consumers, just as Miran suggests.But this logic also overlooks crucial details. While the dollar’s reserve-currency status drives up demand for Treasuries (Treasury bills, Treasury bonds, and Treasury notes), it does not necessarily increase demand for all US assets. Asian central banks, for example, hold trillions of dollars in Treasury bills, to help stabilise their exchange rates and maintain a financial buffer in the event of a crisis. They generally avoid other types of US assets, such as equities and real estate, since these do not serve the same policy objectives.This means that if foreign countries simply need to accumulate Treasury bills, they don’t have to run trade surpluses to obtain them. The necessary funds can also be raised by selling existing foreign assets such as stocks, real estate, and factories.That is precisely what happened in the 1960s through the mid-1970s. By then, the dollar had firmly established itself as the global reserve currency, yet the US was almost always running a current account surplus – not a deficit. Foreign investors were accumulating US Treasuries, while American firms expanded abroad by acquiring foreign production facilities, either through direct purchases or “greenfield” investments, in which they built factories from the ground up.The postwar era was hardly the only time when the country issuing the world’s reserve currency ran a current account surplus. The British pound was the undisputed global reserve currency from the end of the Napoleonic wars in the early 1800s until the outbreak of the first world war in 1914. Throughout that period, the UK generally ran external surpluses, bolstered by high returns on investments across its colonial empire.There is another way to interpret the US current account deficit that helps explain why the relationship between the exchange rate and trade imbalances is more complicated than Miran’s theory suggests. In accounting terms, a country’s current account surplus equals the difference between national savings and investment by the government and the private sector. Importantly, “investment” here refers to physical assets such as factories, housing, infrastructure, and equipment – not financial instruments.When viewed through this lens, it is clear that the current account deficit is influenced not just by the exchange rate but by anything that affects the balance between national saving and investment. In 2024, the US fiscal deficit was 6.4% of GDP, significantly larger than the current account deficit, which was under 4% of GDP.While closing the fiscal deficit would not automatically eliminate the current account deficit – that would depend on how the gap is closed and how the private sector responds – it is a far more straightforward fix than launching a trade war. Reducing the fiscal deficit would, however, involve the difficult political task of convincing Congress to pass more responsible tax and spending bills. And unlike a high-profile trade confrontation, it wouldn’t cause foreign leaders to curry favour with Trump; instead, it would shift media attention back to domestic politics and congressional negotiations.Another key factor behind the current account deficit is the strength of the American economy, which has been by far the most dynamic among the world’s major players in recent years. This has made US businesses particularly attractive to investors. Even manufacturing has grown as a share of GDP. The reason employment has not kept pace is that modern factories are highly automated.skip past newsletter promotionafter newsletter promotionMiran’s plan, clever as it might be, is based on a flawed diagnosis. While the dollar’s role as the world’s leading reserve currency plays a part, it is just one of many factors contributing to America’s persistent trade deficits. And if the trade deficit has many causes, the idea that tariffs can be a cure-all is dubious at best. Kenneth Rogoff is professor of economics and public policy at Harvard University. He was the IMF’s chief economist from 2001-03.© Project Syndicate More

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    Despite Pope Francis’s wishes, there’s little appetite for richer nations to help the poorest

    Pope Francis’s vast funeral in Rome on Saturday featured a certain amount of politicking amid the splendour, against the magnificent backdrop of St Peter’s Basilica.If the meeting between Volodymyr Zelenskyy and Donald Trump results in progress towards a less inequitable peace than the one currently envisaged by the US, perhaps that will be fitting, given the late pontiff’s consistent calls for an end to war.But in Washington last week, at the International Monetary Fund and World Bank, where the architecture is far less glorious, campaigners struggled to find much backing among the powerful for another aspect of Francis’s worldview – his calls to make 2025 a Jubilee year of debt forgiveness for the world’s poorest countries.A quarter century on from the hugely consequential Jubilee 2000 movement – in which churches played a major role – the pope had asked a commission chaired by the economist Joseph Stiglitz to report on the issue next month. Debt relief is also likely to be discussed at the UN financing for development conference in Seville in late June.But there was little optimism in Washington that any country is prepared to offer the necessary moral and political leadership to force the issue up the agenda. Certainly, it will not be the UK, which played a crucial role in the Jubilee 2000 campaign under Gordon Brown, but has shown little interest in the issue since imposing brutal cuts to aid spending, to boost defence.Meanwhile, ample evidence was shared in Washington to show how the situation is rapidly deteriorating. The IMF’s analysts warned that Trump’s dramatic shake-up of the global trading system, the final shape of which remains impossible to guess, will depress economic growth and ratchet up the risks of financial crisis.For emerging economies, the outlook is especially bleak. Many had already been left heavily indebted, after grappling with the Covid pandemic. And as the IMF’s Global Financial Stability Review made clear, one side-effect of the market chaos triggered by Trump’s “liberation day” is likely to be tighter financial conditions.That will make it harder, and more costly, for countries to refinance their debts – a problem the IMF said could be compounded by fresh volatility in the currency markets.The more is spent on debt repayments, the less is available for important areas of government spending that are necessary for development. As Achim Steiner, the head of the UN’s development arm, the UNDP,said on the sidelines of the spring meetings: “The debt servicing is essentially a defunding. We’re defunding, or forcing countries to take money out of their social and welfare and education budgets and health budgets just to service their debt. This is for obvious reasons bad: it’s not sustainable and ultimately contributes further to locking countries in into this stagnation.”He added: “If you are defunding your own education system, you’re locking yourself into a generation that is going to fall behind.”skip past newsletter promotionafter newsletter promotionA report by the British thinktank Development Finance International into tackling inequality in eastern and southern Africa, published at the spring meetings, found that 40% of countries in the region spent more on debt servicing last year than on healthcare and education combined. Since 2022, 80% have cut social spending as a share of their budget.This comes at a time when the economic impacts of the climate crisis are already being felt, in the soaring costs of extreme weather events for example. There is a consensus, at least outside the White House, that significant investment will be needed to manage the transition away from fossil fuels.Another report launched in Washington last week – from the expert panel on climate and finance, a joint project of the Colombian, French, Kenyan and German governments – warned of a “vicious circle”, between the “debt, climate and nature crises”.“Debt pressures and environmental vulnerabilities are most pronounced in the poorest and most credit-constrained countries … yet these countries account for only a tiny fraction of the consumption and emissions driving nature loss and climate change,” they said.Even the IMF itself suggested last week that debt restructuring may need to be part of the toolkit to respond to the rapidly changing economic and financial situation.“The path forward demands clarity and coordination. Countries should work constructively to promote a stable and predictable trade environment, facilitate debt restructuring, and address shared challenges,” it said in its World Economic Outlook.But campaigners complain that the IMF’s debt restructuring process, the Common Framework, is cumbersome and time-consuming – and can still leave beneficiaries with high servicing costs, because it does not contemplate debt write-offs.Scott Bessent, the US Treasury secretary, when he was not taking anti-woke side swipes at the IMF and the World Bank, said he would like to see the IMF get more involved in restructuring struggling countries’ debt. In a much-analysed speech, he said the IMF should “more proactively push official bilateral lenders to come to the table early, to work with borrower countries to minimise periods of debt distress”.Some development campaigners seized on his comments as a positive sign that the US would not stand in the way of multilateral efforts to ease the burden for the world’s poor.But others warned that in saying that he wanted to “make the IMF again”, and calling for it to be a “brutal truth teller”, Bessent appeared to be yearning for a return to the bad old days of economic shock theory, when the fund swept into struggling countries and imposed a prescription of harsh spending cuts and privatisation.Meanwhile, as they geared up to amplify Francis’s calls for a jubilee, some in Washington last week privately warned it may take a large-scale default to force the world’s powerful to accept the need to lift developing countries’ debt burdens. Let’s hope it doesn’t come to that. More