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IMF Warns of Rising Risks as U.S. Tariff Actions Shake Global Markets

Trump's tariff policies and attacks on Federal Reserve independence fuel market volatility, while IMF predicts slower growth but not a global recession.

Currency traders work near a screen showing the Korea Composite Stock Price Index (KOSPI), top left, and the foreign exchange rate between U.S. dollar and South Korean won, top center, at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Monday, April 21, 2025. (AP Photo/Ahn Young-joon)
U.S. dollar banknotes are seen in this illustration taken March 10, 2023. REUTERS/Dado Ruvic/Illustration
A currency trader works near a screen showing the Korea Composite Stock Price Index (KOSPI), top left, and the foreign exchange rate between U.S. dollar and South Korean won at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Monday, April 21, 2025. (AP Photo/Ahn Young-joon)
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Overview

  • Global equity markets have dropped 6% since April 2 when President Trump announced sweeping tariffs, with the U.S. dollar falling to multi-year lows and gold reaching record highs.
  • IMF Managing Director Kristalina Georgieva highlighted unprecedented trade policy uncertainty, warning smaller economies are particularly vulnerable to external shocks.
  • The IMF maintains that while global economic growth will slow, a full-blown recession is not imminent, provided governments act decisively to stabilize markets.
  • Trump’s public criticism of Federal Reserve Chair Jerome Powell and discussions about firing him have raised concerns about the central bank’s autonomy and further weakened investor confidence in U.S. assets.
  • G7 nations remain divided on how to respond to U.S. trade policies, complicating efforts for coordinated action to mitigate global financial instability.