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IMF Chief Credits Absence of Tariff Retaliation for Global Growth

WASHINGTON, April 17 ‍- The global ⁢economy is benefiting from the lack ‌of widespread​ retaliatory ‍tariffs in response⁤ to former U.S. President Donald Trump‘s trade policies, ⁣International Monetary Fund (IMF) Managing Director​ Kristalina​ Georgieva said Wednesday. This⁤ restraint, despite significant trade ⁣distortions ​caused by the initial tariffs,‍ has helped prevent a⁤ deeper slowdown in global growth, she stated during​ a press ⁢conference at the IMF and⁢ World bank Spring Meetings.

Georgieva’s⁢ remarks come ⁢as global trade remains under​ pressure from geopolitical tensions and‌ supply chain disruptions, but notably avoids a full-blown trade war‌ scenario. while Trump-era tariffs on goods from countries like China remain largely in ‍place, the absence of broad-based​ retaliation from affected nations has been a ⁤crucial factor in‍ sustaining economic activity. The IMF chief emphasized that unwinding these tariffs would provide ​a further boost to​ global growth, estimating a potential increase⁣ of 0.5% to global GDP.

The IMF’s ‌latest⁤ World economic ​Outlook, ​released earlier this week, projects ⁣global growth at 3.2% ​for 2024 and 3.1% ⁣for‍ 2025 – a ⁤modest but continued expansion. Georgieva acknowledged⁢ that the global economic⁤ outlook is fragile,⁢ citing risks including persistent inflation, geopolitical ​fragmentation, and rising debt levels. However, she⁣ highlighted that the ⁤avoidance⁢ of escalating trade conflicts⁣ has been a positive⁢ force.

“The ‌fact that there was​ not a ⁣full-blown retaliation‌ to the‌ tariffs that⁤ were imposed is ​something that, in retrospect, we can be grateful for,” Georgieva said. “Because had we seen⁤ a full-scale trade war, the ‌impact on global growth would ⁣have been significantly more severe.”

The original tariffs, implemented beginning in 2018, targeted a wide range of goods, including steel, aluminum,⁤ and ⁤consumer products. While intended⁢ to⁤ protect domestic industries and reduce trade deficits, they⁣ led to increased costs for businesses and consumers ⁣and disrupted⁢ global supply chains. The Biden administration has‍ maintained many of ⁣these tariffs,⁤ while also pursuing new trade initiatives focused on⁢ strengthening relationships‌ with allies⁣ and addressing unfair trade practices.

The IMF continues to advocate for a ⁤rules-based multilateral⁣ trading system ⁢and encourages⁢ countries to resolve trade disputes through the World​ Trade Institution (WTO). ‌Georgieva’s comments underscore⁤ the importance of international cooperation in ‍navigating the complex challenges facing​ the global economy⁣ and avoiding protectionist measures that could further ​undermine growth.