President Donald Trump’s tariffs have caused a “major negative shock” to growth in the global financial system, the International Monetary Fund (IMF) has warned.
U.S. tariffs and “countermeasures” brought by trading partners have brought “effective tariff rates to levels not seen in a century” causing a “negative impact on economic activity and the outlook,” the IMF said in the latest World Economic Outlook report published on Tuesday.
The Trump administration imposed so-called “reciprocal” tariffs on U.S. trading partners including China, Vietnam, and the European Union earlier this month, crashing the stock market in the process.
The crash forced the White House to pause the measures for 90 days and led Trump to lower tariffs on nations that had not retaliated to 10 percent. Beijing, which responded to the initial measures with 125 percent tariffs of their own on the U.S., had their levies revised upwards to 145 percent.
The IMF said the “uncertainty” around the manoeuvres has led it to revise its global GDP growth forecast to 2.8 percent, down 0.5 percent from the the January projection. The latest outlook comes ahead of a two-day meeting for finance ministers from the G20 countries in Washington D.C.
Trump’s Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick sought to intervene over the president’s tariff tantrum earlier this month in a bid to calm the market, The Wall Street Journal reported. The pair convinced Trump to announce a 90-day pause for some of the tariffs, which he announced immediately on Truth Social.
The president has refused to U-turn on his program of tariffs, despite the global economic downturn caused by the measures.
Instead, Trump has called on the Fed to cut interest rates to reduce the impact of his levies. The president has criticized Federal Reserve Chairman Jerome Powell over his role and indirectly threatened to seek to have him replaced if he does not accede to Trump’s demands.
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