WASHINGTON, D.C. — April 22, 2025 — The International Monetary Fund (IMF) has sounded the alarm on escalating global trade tensions, cautioning that rising protectionist policies—particularly from the United States and China—pose serious threats to economic stability, especially for developing countries like Ghana.
At the 2025 Spring Meetings of the World Bank Group and IMF, Managing Director Kristalina Georgieva delivered a stern warning on the disruptive consequences of the new 10% blanket tariff imposed by the U.S. on all trading partners, as well as China’s retaliatory tariffs of 125% and 145%.
Impact on Global Supply Chains
Georgieva highlighted the ripple effects on global supply chains, noting that the costs of tariffs are embedded across multiple countries and sectors, severely complicating business operations.
“The complexity of modern supply chains means imported inputs are embedded in a wide range of domestic products. The cost of a single item can be influenced by tariffs in dozens of countries,” she said.
This web of interdependence, Georgieva explained, has made business planning increasingly uncertain. Companies are now delaying investment, suspending shipping routes, and postponing consumer decisions amid the instability.
Inflation and Economic Slowdown Looming
The IMF chief warned that higher tariffs are already fueling inflation in several economies as importers pass rising costs onto consumers.
“Tariffs, much like taxes, may raise revenue, but they do so at the expense of reducing and redirecting economic activity,” Georgieva noted.
She stressed that while protectionist measures may seem politically expedient, past experience shows the long-term damage—including slower growth, declining investment, and heightened uncertainty in financial markets.
Developing Economies at Risk
For export-reliant economies like Ghana, the timing couldn’t be worse. The IMF believes prolonged trade disruptions could stunt recovery efforts, particularly as many low and middle-income countries are still struggling to bounce back from pandemic-related shocks and debt pressures.
The Fund’s remarks come as calls grow for global cooperation and rules-based trade systems to avoid a full-blown trade war that could reverse hard-won progress on poverty alleviation and economic development.
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