“Uncertainty is costly,” organization chief Kristalina Georgieva has said, citing stalled investment, slower growth, and rising inflation amid trade wars
The global economy is expected to grow more slowly this year and face higher inflation, the International Monetary Fund (IMF) has said, citing global trade disruptions and rising “protectionism.”
Sweeping tariffs imposed by US President Donald Trump, which he says are focused on prioritizing domestic manufacturing and renegotiating trade deals in favor of the US, have caused a sharp rift with trade partners, including the European Union and China.
Speaking on Thursday, IMF Managing Director Kristalina Georgieva called for urgent reforms and renewed global cooperation as she previewed the fund’s upcoming World Economic Outlook report.
Financial volatility is rising sharply and “costly” trade policy uncertainty “is literally off the charts,” Georgieva said, referencing IMF data that showed a steep rise in global unpredictability. She added that the US effective tariff rate has surged to levels “last seen several lifetimes ago.”
While she did not mention Trump by name, the rise in tariffs stems from his administration’s sweeping trade measures, including a blanket 10% tariff on all imports and much higher rates on Chinese goods, with some products facing tariffs as high as 145%. In response, China has raised levies on all US imports from 84% to 125%, marking its most significant retaliatory move to date.
Georgieva’s remarks echoed concerns voiced by other top economic leaders this week, including the heads of the Federal Reserve and the World Bank, who have warned about the damaging effects of Trump’s trade policies.
On Thursday, the European Central Bank cut interest rates, citing “deteriorating growth prospects” due to escalating trade tensions.
Earlier this week, French Prime Minister Francois Bayrou said Trump had launched a global trade war “without warning,” criticizing him for striking both rivals and allies alike with sweeping tariffs and for dismantling decades of cooperation.
Other top EU leaders have also warned the tariffs harm global trade and threaten economic stability. European Commission President Ursula von der Leyen called the move a “major blow,” while Spanish Prime Minister Pedro Sanchez condemned the tariffs as “unintelligent,” and Polish Prime Minister Donald Tusk labeled them “unnecessary and stupid.”
On Friday, Trump reiterated his stance during a meeting with Italian Prime Minister Giorgia Meloni, stating he is in “no rush” to finalize trade agreements, as he believes tariffs are generating significant revenue for the US.