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The IMF has warned that uncertainty over President Donald Trump’s threat to impose trade tariffs is pushing up long-term borrowing costs, adding to the pressures facing the global economy in 2025.
IMF Managing Director Kristalina Georgieva told reporters in Washington on Friday that global economic policy in 2025, especially the trade policy of the world’s largest economy, faces “considerable uncertainty.”
Georgieva noted that while short-term interest rates have fallen, “that uncertainty is actually being expressed globally through the rise in long-term interest rates.”
President Donald Trump returned to the White House, promising to impose high tariffs on goods imported into the United States from trading partners, including a flat 20% tariff on all items.
He has also threatened to impose 25% tariffs on Canada and Mexico, currently the United States’ largest trading partners, and a 10% tariff on Chinese goods, ushering in a new era of global trade wars. It may foretell the beginning.
U.S. allies are nervous about whether the next president is willing to immediately apply blanket tariffs when he takes office on Jan. 20, or whether he will hold off and take a more cautious approach targeting specific sectors. I’m watching over you.
Georgieva said that alongside trade policy, there is “strong global interest” in the incoming Trump administration’s broader economic policy choices, including its tax and deregulation agenda.
Georgieva said the impact of trade policy would be particularly felt in countries that are “more integrated into global supply chains” and in Asia.
Georgieva previewed part of the IMF’s 2025 World Economic Outlook, which will be released next week, suggesting that global economic growth is “stable”.
But overall, he said, U.S. economic growth was “much better than we expected,” while the EU “stalled a bit.”
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China faces deflationary pressures and domestic demand challenges, while low-income countries “are in a position where new shocks could have very negative consequences,” he added.
He said that in 2025, countries will still face the legacy of high borrowing during the coronavirus pandemic and will carry out fiscal consolidation to put public debt “on a more sustainable trajectory.” Said it was necessary.
“Given public sentiment, it turns out that it is very difficult for fiscal policy to act quickly,” he said. “So what is the Fund’s main challenge? “It will address the difficult problem of debt.”
He said the Fed will need more data before making further rate cuts, as U.S. inflation is trending toward the Federal Reserve’s target and new statistics point to a strong job market. He added that there may be a wait.
