WASHINGTON – The global economy benefited substantially from the widespread decision by nations to avoid retaliatory tariffs in response to those imposed by former U.S. President Donald Trump, International Monetary Fund (IMF) Director Kristalina Georgieva stated Tuesday. This restraint, she argued, prevented a damaging escalation of trade tensions.
The IMF recently upgraded its 2025 global GDP growth forecast to 3.2%, from 3% projected in July, citing this lack of broad-based retaliation as a key factor.However, the Fund cautioned that a renewed trade war between the U.S. and China-a threat repeatedly voiced by Trump-could substantially slow economic output. The IMF’s assessment underscores the delicate balance of global trade and the impact of policy decisions on international economic stability.
Georgieva, speaking at an event during the annual IMF and World Bank meetings in Washington, explained that “the world has chosen, so far, not to respond, and to continue trading largely according to existing rules.” She believes this approach averted a potentially devastating “customs escalation that would have fatigued everyone.”
Further supporting global growth, the IMF found that the actual average U.S. tariff rate under trump’s policies was lower than initially estimated. While announced tariffs reached 23% in April, trade agreements with the European Union, Japan, and other key partners brought the average down to approximately 17.5%.
Beyond tariff restraint, Georgieva highlighted the positive impact of improved policies promoting private sector growth and efficient resource allocation, alongside the adaptability of businesses in mitigating the effects of tariffs. These factors collectively contribute to a more resilient global economic outlook.
