IMF warns of ‘significant risk’ to global economy from Trump tariffs

The International Monetary Fund (IMF) has warned that Donald Trump’s implementation of swingeing tariffs poses a “significant risk” to the global economy, as stock markets were hit by a punishing worldwide sell-off by investors.

Kristalina Georgieva, the managing director of the IMF, said it was important that the US and its trading partners avoided further escalating Trump’s trade war, while stock markets plunged on Friday as China retaliated against the tariffs, according to report of UK’s Guardian newspaper.

 “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,” Georgieva said.

 “It is important 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.”

China retaliated on Friday, accusing the US of “bullying” and signalling a new front in the intensifying global trade war.

The Chinese finance ministry said it would impose additional tariffs of 34 per cent on all US goods from 10 April as a countermeasure to sweeping border taxes announced by the US president on Wednesday.

Trump’s “liberation day” tariffs of up to 50 per cent on imports to the US had already wiped trillions of dollars off the value of the world’s biggest companies on Thursday amid heightened fears of a US recession.

The sell-off continued into Friday, with Asian and European markets falling. In London, the FTSE 100 index of the UK’s biggest stocks fell 313 points, or 3.7 per cent, putting it on track for its biggest one-day decline in more than two years.

 “This practice of the US is not in line with international trade rules, seriously undermines China’s legitimate rights and interests, and is a typical unilateral bullying practice,” said China’s state council tariff commission.

Japan’s Nikkei index fell almost 3 per cent on Friday, ending the week down 9 per cent, while Tokyo’s Topix was down 4.5 per cent. South Korea’s Kospi closed down 1.3 per cent.

Elsewhere in Europe, the French Cac 40 index and the German Dax both fell 3.7 per cent.

Brent crude, the international benchmark for oil, fell by 3.8 per cent on Friday, down to $67.48 a barrel. That is the lowest level since early December 2021.

Futures prices indicate that the S&P 500 and the Dow Jones will drop by 0.7 per cent when trading resumes in New York, while the Nasdaq is expected to open down 0.5 per cent.

Derren Nathan, the head of equity research at Hargreaves Lansdown, said: “Despite months of sabre-rattling by Donald Trump, markets appear to have been unprepared for the depth and breadth of tariffs announced by the White House.

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 “The tech-heavy Nasdaq saw the worst of it, falling nearly 6 per cent, but there were hefty drops among the banks, industrials and energy sectors. Traditional defensive havens offered some refuge, with gains seen in consumer staples and utilities.”

Shares in Indian pharmaceutical companies also slumped after Trump said that US tariffs on drugmakers were still under consideration. The NSE Nifty Pharma index fell more than 6 per cent on Friday.