Tariff Shock Clouds IMF, World Bank Talks on Global Growth

by Deborah Oladapo  

The annual meetings of the International Monetary Fund (IMF) and the World Bank, which opened this week in Washington, have been overshadowed by renewed trade tensions between the United States and China following President Donald Trump’s threat to impose 100 per cent tariffs on Chinese imports.

What was expected to be a week of technical discussions on global growth, inflation management, and debt sustainability has now shifted to urgent talks about the potential economic fallout of an escalating trade conflict between the world’s two largest economies.

Trump’s announcement, made last week, rattled global financial markets and reignited fears of a return to the protectionist standoff that had previously slowed world trade and dampened investor confidence. The move, expected to take effect on November 1, is in retaliation for Beijing’s expanded export controls on rare earth minerals — a key input in electric vehicles, semiconductors, and defence technologies.

While investors reacted sharply, U.S. Treasury Secretary Scott Bessent sought to calm markets on Monday, saying he remained optimistic that the planned meeting between Trump and Chinese President Xi Jinping would still hold later this month in South Korea. Bessent also confirmed that staff-level trade discussions between both sides would take place on the sidelines of the IMF and World Bank meetings.

“The 100 per cent tariff does not have to happen,” Bessent told Fox Business Network. “The relationship, despite this announcement, remains open and constructive. Lines of communication have reopened, and we’re working to maintain stability.”

The reassurance helped Wall Street recover from Friday’s sell-off, with the Nasdaq Composite Index climbing more than two per cent in early trading on Monday. Analysts, however, warned that the uncertainty surrounding U.S. trade policy could undermine global growth momentum and disrupt supply chains that had only recently stabilised after the pandemic-era shocks.

IMF Managing Director Kristalina Georgieva, in her opening remarks, said the global economy had demonstrated “remarkable resilience” amid persistent challenges, including geopolitical tensions, monetary tightening, and weakening labour markets in advanced economies. She cautioned, however, that “the balance of risks remains tilted to the downside,” particularly if trade disruptions escalate.

The IMF’s World Economic Outlook, to be released later this week, is expected to project global GDP growth of about three per cent for 2025 — slightly below 2024 levels. Economists at the Fund have warned that new trade barriers could shave up to 0.3 percentage points off global output if the tariff measures go into full effect.

Beyond trade, delegates at the Washington meetings are also grappling with rising sovereign debt burdens across emerging markets, the impact of sustained high interest rates, and the growing divergence between developed and developing economies.

More than 10,000 policymakers, central bankers, and private-sector leaders from 190 countries are attending the sessions, which come at a time of heightened political uncertainty and renewed debate over the future of globalisation.

For emerging economies like Nigeria, the renewed trade tensions raise concerns over oil demand, capital flows, and currency stability. Analysts note that any slowdown in global manufacturing or trade could pressure crude prices — a key source of Nigeria’s revenue — while strengthening the U.S. dollar could further tighten foreign exchange liquidity across developing markets.

With the IMF forecasting a modest three per cent global expansion and the World Bank warning of widening inequality, policymakers from Africa are expected to use this week’s meetings to push for greater debt relief, improved access to concessional financing, and measures to protect vulnerable economies from the ripple effects of another global trade shock.