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The International Monetary Fund (IMF) has issued a warning regarding the impact of Donald Trump’s trade tariff threats on global economy. The IMF Managing Director, Kristalina Georgieva, stated that the uncertainty surrounding trade policies, especially those of the United States, is leading to higher long-term borrowing costs globally.
Trump’s pledge to impose tariffs on imports from various countries, including blanket tariffs on all goods, has raised concerns among US allies and trading partners. The potential trade wars could have significant repercussions on countries heavily reliant on the global supply chain, particularly in Asia.
Georgieva also highlighted the importance of monitoring the economic policies of the incoming Trump administration, such as tax reforms and deregulation efforts. Despite the economic uncertainties, the IMF’s World Economic Outlook for 2025 suggests that global growth remains stable.
While the US economy is performing better than expected, the European Union is experiencing a slowdown. China is facing deflationary pressures and low-income countries are vulnerable to external shocks.
In order to address the challenges posed by high debt levels and the lingering effects of the Covid pandemic, countries will need to focus on fiscal consolidation to ensure sustainable economic growth.
As the Federal Reserve monitors inflation and job market data, further rate cuts may be considered based on economic indicators.