IMF: Trump’s Tariff Initiatives Will Not Cause a Recession Anytime Soon

U.S. President Donald Trump’s intention to impose large-scale tariffs is creating significant uncertainty in the market and undermining investor confidence. However, according to Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), this is unlikely to lead to a recession in the near term.

This is reported by AgroReview

Georgieva noted that the IMF is likely to lower its economic forecast in the upcoming update of the World Economic Outlook, which will be presented in three weeks, but a recession is not expected on the horizon. She emphasized that “we do not see a recession on the horizon” in her interview.

“What we see in high-frequency indicators really suggests that consumer and investor confidence is somewhat weakening, and we know that this then translates into an impact on growth prospects,” she said.

It is worth noting that the IMF has not yet observed a “dramatic impact” from the tariffs imposed by Trump. In January, the fund raised its estimate for global economic growth for 2025 to 3.3% from 3.2%. However, Georgieva acknowledges that an update may be published in April during the spring meetings in Washington that reflects a slight adjustment to the forecast.

Impact of Tariffs on the Global Economy

Georgieva also pointed out that many countries, while adapting their fiscal and monetary strategies during the COVID-19 pandemic, have accumulated high levels of debt, which limits their ability to respond to future economic shocks. A decrease in inflation could slow the reduction of interest rates and complicate debt refinancing.

Moreover, the unpredictable timing of tariff implementation has negatively affected investor sentiment, leading to a nearly 10% drop in major U.S. stock indices since mid-February due to fears that tariffs could slow economic growth or even trigger a recession.

“The sooner there is more clarity, the better, because uncertainty, as our research shows, the longer it lasts, the more it can negatively impact growth,” she noted.

Changes in Global Trade

Despite a surge in protectionist measures, global trade continues to grow, indicating shifts in trade patterns that challenge globalization. Georgieva emphasized that trade in services is growing faster than trade in goods.

After returning to the White House in January, Trump imposed a 20% tariff on all goods from China and threatened 25% tariffs on most goods from Canada and Mexico, as well as announced high tariffs on steel and aluminum imports and 25% tariffs on imported cars. Additionally, he announced April 2 as “Liberation Day,” when he plans to announce global reciprocal tariffs.