Next year, the International Monetary Fund turns 80 years old. Will U.S. officials join the birthday celebrations, or will the Trump administration decide that after seven decades the time has come to pull out of the institution?
The withdrawal of the U.S. from the IMF isn’t unthinkable. President Trump’s “America First” ethos is, after all, opposed to multilateralism in all forms. Not long after his January 2025 inauguration, Trump ordered a review of the country’s continued membership in all international organizations. And some IMF-specific grievances have surfaced in MAGA circles. Project 2025, the playbook from the right-wing Heritage Foundation think tank that has shaped much of the administration’s policy agenda, includes some attacks on the IMF. More recently, U.S. Treasury Secretary Scott Bessent castigated the multilateral financial institutions for deviating from their core mission of “promoting global monetary cooperation and financial stability” by incorporating “climate change, gender and social issues” in their work.
Leaving the IMF may not be unthinkable under the current administration. Such a drastic step, however, would be unwise. A U.S. withdrawal, for instance, could strike a death blow against the “almighty U.S. dollar.” But that’s not the only reason for restraint. The IMF’s political value also lies in its support for U.S.-friendly governments.
Withdrawing from the IMF could undermine the greenback’s global supremacy
Edwin Truman, an influential observer who served as the U.S. Treasury’s assistant secretary for international affairs, finds Washington’s anti-IMF turn alarming. Truman describes the high price the United States would pay if it withdrew from the IMF. The IMF supplies financial assistance to any of the 191 member countries that need emergency credit to make foreign debt payments, shore up currency reserves, or purchase imports, among other things.
The dollar is the currency of choice for many international transactions: 88% of currency trades involve the dollar, 70% of foreign currency debt is issued in dollars, and a big share of international commodity trade is invoiced and settled in dollars. Just under 60% of countries’ foreign currency holdings are in dollars. Because the greenback is so widely used in international transactions, a large share of the IMF’s transactions is done in dollars. Countries are likely to keep using the U.S. currency for their international transactions if they know, in an emergency, they can get dollars from the IMF’s financial assistance programs.
But a U.S. withdrawal would mean the IMF could no longer use dollars from the U.S. quota contribution. If the United States left the organization, countries like China would likely step up to supplant the greenback with their own currencies. Rival currencies (the euro and the Chinese renminbi prime among them) have a long way to go to dislodge “king dollar,” but many countries have a longstanding interest in moving away from a dollar-centric financial order, tracing all the way back to the global financial crisis of 2008.
A tarnished dollar could be costly
With the U.S. out of the institution, IMF members might drift away from the dollar as the preferred currency for international transactions. In Truman’s view, hastening the decline of the dollar’s role as the dominant global currency unit would be the biggest downside to leaving the IMF. Withdrawal would hobble America’s power: As the share of private and public organizations that deal in dollars shrinks, the U.S. government loses the ability to limit access to the greenback as a tool of economic statecraft.
The risk of tarnishing the dollar is indeed costly. But some in the Trump administration seem happy to let confidence in the greenback erode. As a U.S. senator, JD Vance pinned the blame for structural defects in the U.S. economy on “the [dollar’s] reserve currency status and the lack of control we have over our currency.” According to Vance, “we have a lot of financial engineers and diversity consultants; we don’t have a lot of people making things.”
The U.S. would lose a relatively cheap source of global influence
Perhaps the dollar’s decline isn’t a wholly unwelcome prospect for some of the advisors that have President Trump’s ear. But there is another big political cost that comes along with withdrawal from the International Monetary Fund. Study after study shows that U.S.-friendly members receive more generous treatment. The IMF has a pattern of giving less onerous, more generous and less rigorously enforced loans to strategic U.S. allies. Likewise, borrowers that share similar worldviews with elite policymakers in Washington, D.C. are treated more favorably by the IMF.
The IMF’s proclivity for playing favorites makes it valuable to an administration with a personalist and transactional orientation. To illustrate, during the first Trump term the IMF doled out the largest loan in its history to Argentina – $57 billion, or 1,227% of Argentina’s IMF quota. Argentina’s president at the time was Mauricio Macri, and Trump took the occasion to remind reporters of his longstanding friendship and business entanglements with Macri’s family. The takeaway? When larger shares of the resources contributed by the IMF’s members flow to Trump’s friends, the president views the outcome as a win.
Trump has a new Argentine bestie, the chainsaw-wielding populist firebrand Javier Milei. And like Macri, Milei is a beneficiary of the IMF’s favoritism. A new $20 billion IMF loan to Argentina is heavily front-loaded and light on conditionality. Milei and his advisors flouted convention by announcing the terms of the program before the IMF’s board even formally approved it (over the serious reservations of at least half of the board’s directors).
Argentina’s loans come with risks
Argentina now accounts for more than one-third of the IMF’s loanable resources. If things go poorly, the IMF will be under enormous pressure to amend the terms of the program, reducing its credibility. Over 60% of Argentines oppose the loan, which was authorized not by legislative approval but by an emergency presidential decree.
But from the White House’s perspective, the political benefits of the IMF loan are clear. Milei’s approval rating has trended downward as Argentina’s currency reserves dwindle and inflation ticks back up. And Milei’s political agenda hinges on improving his upstart party’s performance in the upcoming congressional elections.
For now, Milei remains more popular than the anti-Trump Peronist figurehead, former president Cristina Fernandez de Kirchner. But the more the economy struggles under Milei, the better things look for the leftist opposition. By extending an economic lifeline, the IMF improves the political fortunes of the most Trump-friendly government in South America.
In this light, notwithstanding concerns about the U.S. dollar, leaving the IMF would be foolish. Prudence, however, is not a hallmark of Trump’s approach to foreign economic policy: Look no further than the zigzagging trade measures in the month after “liberation day.”
But the price of withdrawing from the IMF is higher than sowing more international economic turmoil. On top of further eroding global confidence in the dollar, withdrawal from this global financial institution closes the channels that enable the U.S. to exert outsized influence over the IMF’s decisions. The U.S. would be the big loser if Trump decides to pull out of the IMF.
Stephen C. Nelson is an associate professor of political science at Northwestern University and the author of The Currency of Confidence: How Economic Beliefs Shape the IMF’s Relationship with Its Borrowers (Cornell University Press, 2017).
