IMF Warns: Global Economy Slows as U.S.-China Trade Tensions Escalate
The International Monetary Fund (IMF) has sounded the alarm on the global economy, predicting slower growth and higher inflation. Meanwhile, trade tensions between the U.S. and China have escalated, with both sides imposing higher tariffs.
IMF Managing Director Kristalina Georgieva warned of the rising cost and volatility of economic uncertainty. She expressed concern about the impact of trade policies on global growth. The IMF's forecast reflects these worries, with growth expected to slow to 2.8% this year, down from 3.8% in 2022.
In response to U.S. tariffs, China has hiked its own tariffs on U.S. imports, with rates now ranging from 84% to 125%. This move follows a series of tit-for-tat tariff increases between the two economic giants. Despite criticism from European leaders, U.S. President Trump has reaffirmed his support for tariffs, showing no hurry to finalize trade agreements.
The U.S. effective tariff rate has reached historic highs, with the Trump administration's trade measures contributing to this increase. The European Union, in particular, has criticized the U.S. for breaking tariff agreements and imposing high tariffs on steel and aluminum. The IMF's concerns about trade policies are shared by other major economic institutions, such as the Federal Reserve and the World Bank. The European Central Bank has also cut interest rates due to the adverse impact of escalating trade tensions.
Stalled investment and trade disruptions are key factors behind the global economic downturn, according to the IMF.
The IMF's warning underscores the need for international cooperation to address growing economic challenges. With trade tensions and tariffs affecting growth and inflation, global leaders must work together to foster a more stable and predictable trading environment.
