The International Monetary Fund has urged the United States to collaborate with trading partners in reducing trade restrictions, warning that volatile policy is creating global instability. In its regular assessment of the U.S. economy, the fund called for a coordinated rollback of tariffs and industrial subsidies that have negative cross-border effects.
The report, covering the first year of Donald Trump’s second presidency, reviewed a period of extensive tariffs imposed on numerous allies and competitors. These measures, aimed at shrinking the U.S. trade deficit and reviving domestic manufacturing, significantly disrupted supply chains and financial markets. The IMF noted the administration’s parallel efforts to curb reliance on unauthorized immigrant labour and reduce the federal government’s economic role.
The fund advised that any trade or investment measures invoked for national security must be applied narrowly. It also stressed that Washington should work constructively to address “unfair trade practices” through negotiated reductions in barriers. IMF Managing Director Kristalina Georgieva indicated the report was finalised before the U.S. Supreme Court recently invalidated many of Trump’s tariffs. Since that ruling, the president has imposed a new 10% global tariff, with threats to raise it further.
Georgieva met with Treasury Secretary Scott Bessent and Federal Reserve Chair Jerome Powell ahead of the release. While the IMF shares U.S. concerns over the large current account deficit, which Georgieva described as “too big,” it warned that soaring public debt poses a growing stability risk. Although the immediate risk of U.S. sovereign stress is low, the relentless rise in the debt-to-GDP ratio and short-term borrowing presents serious long-term threats to both the U.S. and global economy.
The IMF projects U.S. GDP growth will accelerate to 2.6% in 2026 from 2.2% in 2024, supported by buoyant activity and strong productivity. However, it cautioned that uncertainty around trade policy could impose a larger-than-expected drag on economic performance. This Article IV consultation follows similar concerns raised in 2024 under the previous administration, when the fund advocated unwinding trade barriers and fiscal reforms to address rising debt. The latest findings underscore the IMF’s persistent view that U.S. policy unpredictability and fiscal trajectory are critical issues with worldwide implications.
