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.
