The Director of the IMF, Kristalina Georgieva, has called upon the President and the nations impacted to refrain from actions that might exacerbate the situation, advocating instead for a pursuit of peaceful and diplomatic resolutions.
On Thursday, Kristalina Georgieva, the Director of the International Monetary Fund, issued a stark warning regarding the recent tariffs imposed by President Donald Trump. She emphasised that these measures represent a considerable risk to the global economy, particularly as the nation grapples with a phase of sluggish growth.
“We are currently evaluating the broader economic consequences of the recently announced tariff measures, which undoubtedly present a considerable threat to the global economic landscape amid sluggish growth,” Georgieva remarked, subsequently imploring the US president to reconsider his declaration and advising the impacted nations against retaliatory actions that could exacerbate the situation and heighten uncertainty.
“It is crucial to steer clear of actions that may exacerbate the challenges facing the global economy.” “We urge the United States and its trading partners to engage in constructive dialogue to address trade tensions and alleviate uncertainty,” he stated.
In a similar context, JP Morgan had previously cautioned that the tariffs imposed by Washington could inflict considerable damage on the nation, potentially resulting in an economic downturn, notwithstanding the tax revenue they might produce, as it will ultimately be consumers who will endure the consequences of these price hikes.
“The resulting impact on purchasing power could push real disposable personal income growth into negative territory in the second and third quarters,” explained the agency’s chief economist, Michael Feroli, who further noted that this effect alone “could bring the economy perilously close to a recession.”
In the wake of the executive order signed the previous day, which outlined the specific tariffs imposed on various trading nations with the United States, global markets reacted unfavourably, apprehensive about the potential widespread ramifications this could entail.
On the very first day, Wall Street experienced a significant downturn, marking its most severe session since 2020, during the peak of the coronavirus pandemic.
The S&P 500 experienced a dramatic decline of 4.8%, outpacing the downturns seen in major markets across Asia and Europe, marking its most significant drop since the pandemic wreaked havoc on the economy in 2020. Meanwhile, the Dow Jones Industrial Average plummeted by 1,679 points, equivalent to a 4% decrease, and the Nasdaq Composite suffered a staggering 6% fall.
In summary, the S&P 500 experienced a decline of 274.45 points, settling at 5,396.52. Meanwhile, the Dow Jones Industrial Average plummeted by 1,679.39 points, reaching 40,545.93, and the Nasdaq Composite saw a decrease of 1,050.44 points, closing at 16,550.61.
Europe experienced a downturn, with the FTSE 100 in the UK declining by 1.34 percent, France’s CAC 40 falling by 2.98 percent, Germany’s DAX Performance dropping by 2.25 percent, and the pan-European Euronext index decreasing by 2.80 percent.
In off-exchange trading, oil prices experienced a notable decline of 6%. This was largely influenced by a 6.42% decrease, bringing Brent North Sea crude for June delivery down to USD 70.14, while West Texas Intermediate crude for May delivery fell by 6.64% to USD 66.95.
In spite of these ramifications, Trump staunchly defended his policy, claiming it will bolster the strength of the United States. “The operation has been successfully concluded.” The patient is currently alive and on the mend. The outlook suggests he will emerge significantly stronger, larger, improved, and more resilient than before,” he noted on his Truth Social profile, where he once again called on individuals to “Make America Great Again!”
Nevertheless, soon after the trading session concluded, the Republican expressed a readiness to contemplate a rate cut, provided that nations present something “phenomenal” in exchange.
“Tariffs provide us with significant leverage in negotiations,” he remarked, as global leaders chose to pursue dialogue instead of escalating hostilities.
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