The International Monetary Fund (IMF) on Wednesday (Feb. 25) called on the United States to work constructively with its trading partners to mutually reduce trade restrictions, as it released its latest review of the US economy.
The report covers the first year of President Donald Trump’s second term, during which his administration introduced sweeping tariffs on both allies and competitors in an effort to shrink the US trade deficit and boost domestic manufacturing.
However, the IMF noted that the administration’s shifting tariff policies have disrupted supply chains and unsettled financial markets. Over the past year, Washington has also sought to reduce reliance on undocumented immigrant labour and scale back the federal government’s role in the economy.
In its statement, the IMF urged US authorities to collaborate with partners “to address concerns over unfair trade practices and agree on a coordinated reduction in trade restrictions and industrial policy distortions that have negative cross-border effects.”
It further advised that trade and investment measures introduced for national security reasons—including tariffs and export controls—should be applied narrowly.
IMF Managing Director Kristalina Georgieva told journalists that the report had been prepared before the Supreme Court of the United States struck down many of Trump’s tariffs last Friday. She added that the IMF would assess the implications of the ruling.
Following the decision, Trump invoked a separate legal authority to introduce a new 10% global tariff and has indicated he may raise it to 15%.
Georgieva also met with US Treasury Secretary Scott Bessent and Federal Reserve Chair Jerome Powell ahead of the report’s release.
She said the IMF shares concerns about the size of the US trade and current account deficit, describing the gap as “too big.”
Public Debt and Stability Risks
The IMF highlighted that the continued rise in US public debt remains a significant issue. While the risk of sovereign stress is currently low, the upward trajectory of the debt-to-GDP ratio and increasing short-term debt levels pose a growing stability risk to both the US and the global economy.
Growth Outlook
The IMF projects US GDP growth at 2.6% in 2026, up from 2.2% last year. While the economy remains “buoyant,” the fund warned that uncertainty surrounding trade policies could weigh more heavily on economic activity than expected.
In its concluding statement under the “Article IV” consultation, the IMF noted continued strong productivity growth, despite a government shutdown that dampened fourth-quarter performance.
The IMF last issued US-focused policy recommendations in 2024, when it raised concerns over expanding trade restrictions and called for measures to address rising public debt.
Source: Agence France-Presse (AFP)
