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E-mail Xinhua, April 18, 2025
International Monetary Fund (IMF) Managing Director Kristalina Georgieva on Thursday warned that uncertainty is "costly" amid recent tariff increases, noting that rising trade barriers have an immediate impact on growth.
"Putting together all the recent tariff increases, pauses, escalations, and exemptions, it seems clear that the U.S. effective tariff rate has jumped to levels last seen several lifetimes ago," Georgieva said in a speech before the IMF-World Bank Spring Meetings scheduled for next week.
"The complexity of modern supply chains means imported inputs feed into a broad range of domestic products. The cost of one item can be affected by tariffs in dozens of countries. In a world of bilateral tariff rates, each of which may be moving up or down, planning becomes difficult," Georgieva said.
"The result? Ships at sea not knowing which port to sail to; investment decisions postponed; financial markets volatile; precautionary savings up. The longer uncertainty persists, the larger the cost," she continued.
The IMF chief noted that rising trade barriers hit growth "upfront," and protectionism erodes productivity over the long run, especially in smaller economies.
The IMF will quantify these costs in its new World Economic Outlook, to be released early next week.
"In it, our new growth projections will include notable markdowns, but not recession. We will also see markups to the inflation forecasts for some countries," Georgieva said.
The IMF chief urged policymakers to redouble efforts to "put their own houses in order," noting that most countries must "take resolute fiscal action to rebuild policy space," setting out gradual adjustment paths that respect fiscal frameworks.
She also called for "agile and credible" monetary policy, along with strong financial regulation and supervision.
Highlighting the importance of "cooperation in a multi-polar world," the IMF chief emphasized that trade policy must aim for a settlement among the largest players that preserves openness and delivers a more-level playing field - "to restart a global trend toward lower tariff rates while also reducing nontariff barriers and distortions."
