By Ayo Kehinde
The International Monetary Fund has raised the alarm over the potential consequences of a renewed trade war led by the United States, just days before Donald Trump’s inauguration as the 45th President of the United States on January 20.
In its latest World Economic Outlook report, the IMF cautioned that Trump’s proposed tariffs on imports, particularly from Canada, Mexico, and China, could disrupt global trade and economic stability.
The organisation warned that an intensification of protectionist policies would carry significant risks for global growth and market efficiency.
“An intensification of protectionist policies… in the form of a new wave of tariffs, could exacerbate trade tensions, lower investment, reduce market efficiency, distort trade flows, and again disrupt supply chains. Growth could suffer in both the near and medium term, but at varying degrees across economies,” the report stated.
Trump had previously vowed to impose tariffs on all imports into the United States, with Canada, Mexico, and China singled out for higher duties, sparking concerns over escalating trade tensions.
The IMF acknowledged that while Trump’s policies, including tariffs, tax cuts, and deregulation, might provide a temporary boost to the U.S. economy, they could trigger a broader economic downturn in the long run.
“An inflationary boom followed by a bust that could weaken U.S. Treasury bonds is a potential consequence,” the report warned.
As Trump prepares to take office, global financial institutions and analysts are closely monitoring how his policies will impact international trade and economic stability.
The IMF’s warning underscores the importance of balanced trade policies to avoid long-term disruptions to the global economy.
