Amid ongoing tensions between the United States and China over trade, and following former President Donald Trump’s sweeping tariffs on U.S. trading partners, the International Monetary Fund (IMF) has issued a stark warning about the potential global economic fallout.
Many countries, including Australia, are currently facing a 10% “baseline” tariff on their exports to the U.S., exacerbating concerns over rising trade barriers. The IMF’s forecasts, released less than three weeks after Trump announced tariffs during what he called “liberation day” on April 2, highlight the growing uncertainty and risks to the world economy.
The IMF emphasized that the rapid escalation of trade tensions, coupled with “extremely high levels” of policy-related uncertainty, could significantly hamper economic activity worldwide. IMF chief economist Pierre-Olivier Gourinchas described the current situation as the beginning of a “new era,” stating, “The global economic system that has operated for the last 80 years is being reset.”
This shift signals a fundamental change in global economic dynamics, with the potential to disrupt growth, investment, and trade flows across nations as policymakers navigate the uncertain landscape shaped by recent tariffs and trade disputes.
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