The IMF is delivering stark warnings about the damaging impact of tariffs and other US actions on the global economy and financial markets. But it may be too little too late to avoid a financial meltdown and global recession.
She noted the jump in US tariffs “to levels last seen several lifetimes ago” but refrained from outright censure of the Trump administration. Others are less reticent. “The Trump administration is embarking on an economic equivalent of the Vietnam war – a war of choice that will soon result in a quagmire, undermining faith at home and abroad in both the trustworthiness and the competence of the United States – and we all know how that turned out,” wrote Adam Posen, president of the Peterson Institute for International Economics, in Foreign Affairs magazine.
We have come through many crises that we had been warned about. With the world’s biggest economy and source of finance at the heart of the problem, we must ask: who will bail out the system?
So far, these reactions have been “modest”, according to the IMF’s April 14 global financial stability report. But financial markets have myriad linkages to the global real economy and it is through this nervous system that the body of the economy could suffer a collapse.
