The International Monetary Fund (IMF) cautioned on Thursday that sustained U.S. tariffs on Mexico and Canada could have a substantial negative impact on both countries’ economies, citing their deep integration with the U.S. economy. This statement comes as global trade tensions escalate and markets react to shifting policies.
IMF spokesperson Julie Kozack highlighted the significance of the U.S. tariffs on Mexico and Canada, coupled with new duties on China and retaliatory measures from China and Canada, and potentially Mexico. These actions represent a major shift in the global trade landscape, Kozack noted. A more comprehensive analysis of the global economic impact of these U.S. trade policy changes, including the effects on the most affected countries, will be released by the IMF in its updated economic outlook in April during the spring meetings of the IMF and World Bank in Washington.
In its initial substantive response to recent U.S. trade actions, the IMF emphasized the potential consequences for Canada and Mexico. Kozack stressed the importance of determining whether the current market uncertainty is temporary or persistent. Historically, extended periods of heightened uncertainty can lead to both households and businesses delaying consumption and investment decisions.
Since assuming office, U.S. President Donald Trump has initiated a global trade war by imposing tariffs on China, Canada, and Mexico, the United States’ largest trading partners. While temporary reprieves are currently being offered to Canada and Mexico, the situation remains fluid. President Trump has also indicated intentions to announce further trade measures, including reciprocal tariffs against countries like India and South Korea.
Kozack explained that the global economy is undergoing significant transformations, including rapid advancements in artificial intelligence, shifting capital flow patterns, and a decline in trade as a driver of global growth. Trade growth currently stands at 3%, half the rate observed from 2000 to 2019.
Governments are recalibrating their approaches and adjusting policies in response to this evolving global context, Kozack said, noting increased financial market volatility and growing indicators of global uncertainty. When questioned about declining U.S. bond yields since the beginning of 2025, Kozack suggested that this movement might indicate a market reassessment of the outlook for monetary policy.
Recent U.S. economic data has shown signs of weakness, with the newly implemented tariffs contributing to negative sentiment both within and outside the U.S. The IMF’s upcoming April report will provide a more in-depth examination of these complex and interconnected issues.
