The International Monetary Fund (IMF) recently released an update to its World Economic Outlook, titled “Global Economy: Steady amid Divergent Forces.”
US Trade Policy and Tariffs
Donald Trump announced a 10% tariff on all goods imported to the United States from Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands, and Finland, effective February 1. This tariff is set to increase to 25% from June 1 unless these countries allow the US to gain control of Greenland. The IMF report, released the day after this announcement, stated that "trade tensions have continued to abate but remain subject to occasional flare-ups" since October 2025. The report noted that the overall US effective tariff rate was at a similar level to what was assumed in the October 2025 WEO, but acknowledged that "changes for specific countries can be meaningful." Data cited indicates that tariffs paid by Americans are currently more than six times higher than the previous year.
Economic Projections and Risks
The IMF report highlights artificial intelligence (AI) as a potential driver of future economic growth. It suggests that "rapid adoption of AI, possibly facilitated by the ongoing surge in AI-related investment in both hard and soft infrastructure, could significantly improve productivity and boost medium-term growth prospects sooner rather than later." However, the report also acknowledges risks, stating that AI investments could "fail to deliver earnings commensurate with their lofty valuations, and investor sentiment could sour," potentially leading to "triggering a costly reallocation of capital and labor … and a more significant correction in equity markets, global output losses could increase further," indicating a risk of global recession.
Energy Concerns and International Relations
For energy concerns, the IMF suggests that governments enact "complementary policies to contain the potential impact on energy prices" and "scale up the necessary critical intermediate inputs, and labour market programs to manage workforce transitions are in place." The report does not specifically mention Greenland, Venezuela, or Trump. The IMF's perspective presented in the report asserts that "against this backdrop of stabilising trade tensions and supportive financial conditions, the global economy has continued to be remarkably resilient, adapting to the shifting landscape and with momentum varying across countries and sectors."
Separately, Trump reportedly proposed a "board of peace" for countries to join his personal UN, with a $1 billion price for permanent membership. Following French President Macron's refusal, Trump reportedly threatened a 200% tariff on French wine. Additionally, Trump is reported to have withdrawn the US from 66 international organizations, including the International Institute for Justice and the Rule of Law, the UN Conference on Trade and Development, and the International Trade Centre.