The International Monetary Fund (IMF) has issued a stark warning about the potential global fallout from the economic policies of U.S. President-elect Donald Trump. The IMF highlighted a range of risks, including escalating trade tensions, distorted supply chains, and disrupted global investment, stemming from Trump’s aggressive tariff threats and economic agenda.
Trump has proposed tariffs on countries like China, Mexico, and Canada and suggested 100% tariffs on the BRICS bloc should they pursue a rival currency to the U.S. dollar. The IMF’s biannual forecast underscores the potential short-term benefits of Trump’s tax cuts and deregulation, which could boost the U.S. economy, but warns of longer-term risks, including an inflationary boom followed by an economic bust.
Such a scenario could weaken the role of U.S. Treasury bonds as a global safe asset. Traditionally viewed as one of the safest investments, U.S. Treasuries could lose their allure, potentially destabilizing global financial markets. Excessive deregulation, the IMF added, might lead to a soaring dollar, diverting capital from emerging economies and slowing global growth.
The IMF also raised concerns about Trump’s proposed mass deportations of undocumented immigrants, warning this could permanently reduce U.S. economic output while driving inflation higher.
Global growth is projected at 3.3% for 2025 and 2026, below the historical average of 3.7%. While the IMF expects higher U.S. growth to partially offset slower growth in other major economies, it stressed that stability depends on avoiding dramatic policy shifts that could harm both the U.S. and global economy.
Pierre-Olivier Gourinchas, the IMF’s chief economist, noted that global markets are stabilizing after disruptions caused by the pandemic and geopolitical crises like Russia’s invasion of Ukraine. However, he cautioned that Trump’s proposed economic policies could derail this recovery.
The IMF’s analysis indicates that under Biden’s policies, the U.S. remains the fastest-growing G7 economy, with a 2.7% growth rate projected for 2025 and 2.1% in 2026. Whether this trajectory continues under Trump’s administration will depend on his economic decisions in the months ahead.
