Donald Trump, in what has become a trend during his Presidency, continues to cause volatility on the financial markets by disturbing the relationship between the US and international organizations. This time around Trump is speaking out against the World Health Organization, accusing it of not handling the coronavirus pandemic well, and for protecting China on the same topic. Trump has frozen all US funding to the WHO and claims he will permanently withdraw the United States’ membership from the organization if it doesn’t reform and improve in the next 30 days.
Trump also reiterated his earlier statements that China tried to cover up vital information about the virus regarding its spread and seriousness. While China does not have the best record of sharing information about its internal affairs with the world, the WHO maintains that China was upfront and transparent about the disease, which is what angered Trump.
Contributions from the United States typically account for 15-20% of the WHO’s annual budget. This money is used to develop and distribute new vaccines and provide other kinds of health support throughout the world. Funding is in dire need always, but especially now that the world is trying to develop a vaccine against the coronavirus.
As of today, there are over 4.9 million people that have contracted the novel coronavirus, with over 1.5 million in the United States alone. The disease continues to spread rapidly in Russia, which now has close to 300,000 cases.
Moreover, Trump’s continued accusations against China are spiking fears of a renewal in the trade war between the world’s two largest economies. This is putting a strain on the financial markets and increasing the demand for safety assets like the USD, the JPY, and gold.
Meanwhile, in Europe the talk of the so-called “coronabonds” (or joint debt) is starting once again. France and Germany came up with a plan for a recovery fund worth 500 billion euro to be spent on businesses that were hit by the pandemic the most. The funding will most likely be used to support the tourism, air travel, and automobile industries, which have all suffered heavy losses during the lockdowns. Still, the recovery fund needs to be approved by the whole of the EU and concerns remain that financially conservative countries like the Netherlands and Austria will not support the plan.
