Surging US tariffs will weaken the global economy and push up inflation this year, according to projections to be released next week by the International Monetary Fund.
The IMF’s Managing Director, Kristalina Georgieva, said Thursday that the Trump administration’s sharp increases in duties have caused global uncertainty to spike. The import taxes will slow global growth, but not cause a worldwide recession, she added. The details of the IMF’s outlook will be issued Tuesday.
The world economy’s resilience is being tested by the reboot of the global trading system that threatens to cause turbulence in financial markets, Georgieva said.
That turbulence has been playing out in financial markets for weeks now, especially on Wall Street, which has experienced wild swings from day-to-day and often times even hour-to-hour.The IMF chief also echoed some Trump administration concerns. She called on countries to reduce their tariffs and lower other barriers to trade, a process that she said had stalled out in the past decade after making steady progress for many years after World War II.Trade distortions tariff and nontariff barriers have fed negative perceptions of a multilateral system seen to have failed to deliver a level playing field, she said. This feeling of unfairness in some places feeds the narrative: we play by the rules while others game the system without penalty.
Georgieva added that tariffs cause uncertainty, which can be costly. Due to the complexity of supply chains, the cost of a single item can be affected by tariffs in dozens of countries, she said.
