Yellen says isolationism ‘made America and the world worse’ in speech to global financial leaders

WASHINGTON – Treasury Secretary Janet Yellen told world financial leaders on Tuesday that the US economy has strengthened because the Biden administration rejected isolationism, offering a thinly veiled critique of the policies of former President Donald Trump two weeks before the US election.

Yellen opened the annual meetings of the IMF and the World Bank by highlighting the economic growth of the United States since the nation was in the grip of the COVID-19 pandemic. Without mentioning Trump by name, he said in a speech that the Biden administration had ended a period of international isolationism that “made America and the world worse.”

“We went from millions losing their jobs to a historic labor market recovery,” Yellen said. He said US economic growth has been “almost twice as fast as most other advanced economies this year and last, even though inflation fell earlier.”

The IMF released its international outlook on the world economy on Tuesday morning and upgraded its economic outlook for the United States this year, while lowering its growth expectations for Europe and China.

The IMF expects the US economy, the world’s largest, to expand 2.8 percent this year, down slightly from 2.9 percent in 2023, but an improvement from 2.6 percent it had forecast for 2024 in July. Growth in the United States has been led by strong consumer spending, boosted by good inflation-adjusted wage gains.

The meetings mark the last major international financial meeting held during the Biden administration and come as economic issues are a top concern of American voters. Republicans have blamed the Biden-Harris administration for inflation that hit a 40-year high before falling. Trump campaign press secretary Karoline Leavitt said in a statement that the Biden-Harris administration “created a crisis of inflation, record gas prices, rising mortgages and interest rates which resulted in the lowest consumer and small business confidence in decades.”

According to an October poll by the Associated Press-NORC Center for Public Affairs Research, voters remain largely divided on whether they prefer Republican nominee Trump or Democratic Vice President Kamala Harris to handle key economic issues.

Whoever wins the US election will also have a huge impact on global finance and the world economy.

Trump and Harris have said little about their plans for the International Monetary Fund and the World Bank. But they have different views on trade, tariffs and other economic issues. Trump has been skeptical of global financial institutions and promises high tariffs if elected. Harris is more likely to continue the Biden administration’s approach of favoring international cooperation in the face of threats, although he has supported some tariffs.

Yellen, like other federal officials, is barred from partisan political activity by the Hatch Act and chose her words carefully in her speech. But he praised the Biden-Harris initiatives on climate, health care, infrastructure spending and other areas.

He alluded to Trump’s international leadership, saying: “From day one, we rejected the isolationism that made America and the world worse and pursued global economic leadership that supports economies around the world and delivers meaningful benefits to the American people and the US economy.”

Trump, who has embraced isolationism and criticized multilateral institutions, promises as president to impose a 60 percent tariff on all Chinese goods and a “universal” tariff of 10 percent or 20 percent on everything else to enter the United States, insisting that the cost of taxing imported goods is absorbed by the foreign countries that produce those goods.

Leading economists say this would be a tax on American consumers that would make the economy less efficient and raise inflation in the United States.

The Biden-Harris administration has not removed tariffs imposed on China during the Trump administration and in May also slapped significant tariffs on Chinese electric vehicles, advanced batteries, solar cells, steel, aluminum and medical equipment.