IMF Warns Trump Tariffs Pose Greater Threat to Emerging Markets Than COVID-19 Crisis

The International Monetary Fund has issued a stark warning: President Trump's trade war presents a more complex challenge for emerging market policymakers than the COVID-19 pandemic did five years ago. First Deputy Managing Director Gita Gopinath emphasized that unpredictable tariff impacts could destabilize developing economies just as global trade volumes show signs of contraction.

Central banks face unprecedented complications. Unlike during the pandemic when monetary easing followed a uniform global pattern, current tariff shocks create divergent economic effects. The Federal Reserve's reluctance to cut rates further complicates the calculus for emerging market central bankers.

New US tariffs on Chinese goods threaten to accelerate inflation while depressing growth in cost-sensitive markets. This dual pressure creates policy dilemmas unseen since the height of the pandemic disruptions.