IMF chief warns of "costly" uncertainty amid recent tariff increases

Washington: International Monetary Fund (IMF) Managing Director Kristalina Georgieva on Thursday warned that uncertainty is costly amid recent tarif...

Washington: International Monetary Fund (IMF) Managing Director Kristalina Georgieva on Thursday warned that uncertainty is "costly" amid recent tariff increases, noting that rising trade barriers have an immediate impact on growth.

"Putting together all the recent tariff increases, pauses, escalations, and exemptions, it seems clear that the US effective tariff rate has jumped to levels last seen several lifetimes ago," Georgieva said in a speech before the IMF-World Bank Spring Meetings scheduled for next week.

"The complexity of modern supply chains means imported inputs feed into a broad range of domestic products. The cost of one item can be affected by tariffs in dozens of countries. In a world of bilateral tariff rates, each of which may be moving up or down, planning becomes difficult," Georgieva said.

"The result? Ships at sea not knowing which port to sail to; investment decisions postponed; financial markets volatile; precautionary savings up. The longer uncertainty persists, the larger the cost," she continued.

The IMF chief noted that rising trade barriers hit growth "upfront," and protectionism erodes productivity over the long run, especially in smaller economies. The IMF will quantify these costs in its new World Economic Outlook, to be released early next week.