IMF leader delivers rare criticism after Trump tariffs

Kristalina Georgieva urges US 'to avoid steps that could further harm the world economy'

IMF Managing Director Kristalina Georgieva urged the US to avoid steps that could hurt the global economy. AFP

International Monetary Fund Managing Director Kristalina Georgieva on Thursday warned of the risks US President Donald Trump's tariffs pose to the world economy, delivering a rare rebuke of the fund's largest shareholder.

“We are still assessing the macroeconomic implications of the announced tariff measures, but they clearly represent a significant risk to the global outlook at a time of sluggish growth,” Ms Georgieva said in a statement.

The IMF leader's criticism came after Wall Street suffered its steepest one-day decline since the Covid-19 pandemic. The Dow Jones Industrial Average dropped 1,600 points, the S&P 500 and Nasdaq fell 4.84 and 5.97 per cent, respectively, while the small-cap Russell 2000 entered bear market territory.

Mr Trump so far has been defiant, remaining adamant that his universal and reciprocal tariffs would be a boon to the US economy.

But Ms Georgieva urged the US – the Washington-based fund's largest shareholder – “to avoid steps that could further harm the world economy”.

“We appeal to the United States and its trading partners to work constructively to resolve trade tensions and reduce uncertainty,” she said.

Her comments mark a rare criticism from the IMF, which rarely chastises member nations outside its scheduled assessments. The fund previously warned against protectionist measures during former president Joe Biden's administration in the IMF's annual article IV consultation last year.

Some of the countries facing Mr Trump's reciprocal tariffs are the IMF's largest debtors, including Argentina and Egypt. Pakistan, another large borrower from the IMF, was also subject to Mr Trump's tariffs.

Ms Georgieva's statement comes ahead of the IMF and World Bank Spring Meetings in Washington later this month, when the fund is due to release its latest global economic outlook. The fund in January projected global growth to be 3.3 per cent this year, below the 2000-2019 average growth rate of 3.7 per cent.

The IMF said it had ruled out the possibility of a US recession during a regular press briefing last week.