It occurs as worries are growing in anticipation of Donald Trump’s potential reelection.
While the European Union is already preparing response if Washington moves forward with the new charge, Trump claims he intends to impose a universal tax or tariff of up to 20% on all imports into the US.
Following Trump’s statement last week that “tariff is the most beautiful word in the dictionary,” international markets and finance ministers are now starting to examine the possibility of his implementing the ideas seriously.
Although the Fund is unable to evaluate the details of Trump’s trade policy at this time, Gita Gopinath, the Deputy Managing Director of the IMF, stated that “if you have some very serious decoupling and broad scale use of tariffs, you could end up with a loss to world GDP of close to 7%.”
These figures are enormous; 7% essentially represents a decline in the economies of Germany and France. “That’s how big the loss would be,” she added.
Additionally, hundreds of billions of dollars in tariffs, according to Ms. Gopinath, “is very different from the world we’ve lived in over the past two or three decades.”
