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IMF Warns Trump’s Economic Policies Could Backfire, Impact Global Growth  

The International Monetary Fund (IMF) has issued a stark warning about the global impact of economic policies under incoming US President Donald Trump, cautioning that his proposed measures could harm

The International Monetary Fund (IMF) has issued a stark warning about the global impact of economic policies under incoming US President Donald Trump, cautioning that his proposed measures could harm other nations and ultimately backfire on the United States itself.  

Central to the IMF’s twice-yearly forecast is concern over Trump’s threats to impose sweeping tariffs on countries like China, Mexico, Canada, and even the BRICS bloc if they create a rival currency to the US dollar. The IMF argues that such tariffs could worsen trade tensions, disrupt supply chains, distort market pricing, and lower global investment.  

While the combination of tariffs, tax cuts, and deregulation might stimulate the US economy in the short term, the IMF warns it could trigger an inflationary boom followed by a bust. This would undermine the global role of US Treasury bonds, often seen as a safe asset by investors.  

“If red tape on businesses is cut too much, the US could face a runaway dollar,” the IMF said, adding that this would pull capital away from emerging economies, further depressing global growth.  

The IMF predicts global growth will hover at 3.3% in both 2025 and 2026, significantly below the historical average of 3.7%. The outlook for 2025 remains largely unchanged, with higher-than-expected US growth offsetting weaker performance in other major economies.  

The World Bank has echoed similar concerns, warning that US tariffs could hinder trade and push global growth down to 2.7% in 2025 — the weakest pace since 2019, excluding the pandemic’s economic fallout.  

The IMF also flagged Trump’s proposed deportation policies for undocumented immigrants, noting that such measures could “permanently reduce potential output” in the US while increasing inflationary pressures.  

If US Treasury bonds lose their status as a global safe asset due to policy-induced economic instability, it could erode confidence in the broader financial system, the IMF added.  

In contrast, the UK’s economic forecast presents a more optimistic picture. The IMF predicts the UK’s economic output will grow by 1.6% in 2025, slightly higher than the 1.5% forecast made last October.  

UK Chancellor Rachel Reeves celebrated the revised projection, stating, “The UK is forecast to be the fastest-growing major European economy over the next two years and the only G7 economy, apart from the US, to have its growth forecast upgraded for this year.”  

The IMF’s warnings highlight the interconnected nature of global economies. While the US may benefit temporarily from Trump’s proposed policies, the long-term risks — including trade disruptions, weakened global growth, and declining trust in US financial assets — could outweigh the gains, with ripple effects felt worldwide.  

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