In its latest global economic growth forecast, the International Monetary Fund (IMF) highlighted significant risks associated with President-elect Donald Trump’s return to the White House. The IMF warns that “massive uncertainty” surrounding Trump’s policies is already impacting global markets, reports the BBC.
The IMF expressed concerns that Trump’s proposed tariffs could exacerbate trade tensions, reduce investments, and disrupt global supply chains.
Short-Term Gains, Long-Term Risks
The IMF acknowledged that measures such as tariff implementation, tax cuts, and deregulation could provide a short-term boost to the U.S. economy. However, the Fund cautioned that these policies might ultimately backfire, leading to adverse effects on economic growth.
Trump’s proposed tariffs, a cornerstone of his economic strategy, aim to stimulate domestic growth, protect jobs, and increase tax revenues. However, global leaders fear these measures could raise costs for companies exporting goods to the U.S., the world’s largest economy.
Escalating Trade Tensions
The IMF specifically highlighted Trump’s threats to impose tariffs on China, Canada, and Mexico on his first day of the new term, January 20. Proposed tariffs include:
- 10% on all global imports,
- 25% on imports from Canada and Mexico,
- 60% on Chinese goods.
Additionally, Trump has vowed to implement 100% tariffs on BRICS nations (a group of nine countries) if they create a currency to compete with the U.S. dollar.
Such actions, the IMF warns, could lead to a surge in inflation in the U.S., potentially followed by slower economic growth. This could weaken confidence in U.S. Treasury bonds, traditionally seen as a safe investment.
Broader Economic Implications
The IMF also expressed concern about Trump’s immigration policies, particularly the deportation of illegal immigrants. These measures could “permanently reduce potential output” and further increase inflation.
The World Bank has echoed similar concerns, predicting that new U.S. tariffs could hinder global trade and slow global economic growth to 2.7% in 2025—the weakest performance since 2019, excluding the pandemic’s peak.
The IMF projects “stable yet weak” global growth of 3.3% in 2025 and 2026, compared to the historical average of 3.7%.
As the Trump administration prepares to take office, the global economic outlook faces heightened uncertainty. The IMF and other international bodies are urging caution, warning that aggressive tariff policies and restrictive immigration measures could have widespread repercussions on both the U.S. and global economies.
