The International Monetary Fund has warned that Donald Trump’s escalating trade war risks triggering widespread financial instability, with geopolitical tensions now at their highest in decades.
In a report published Monday, the IMF said rising uncertainty over tariffs and global trade could spark sharp corrections in markets and disrupt macro-financial stability.
The fund cited recent market turmoil following Trump’s latest wave of tariffs, which caused global equities to slide and triggered the steepest margin calls for hedge funds since the 2020 pandemic.
The IMF highlighted the difficulty investors face in pricing geopolitical risk, warning of a potential “feedback loop” where uncertainty leads to volatility and broader financial stress.
Trump’s latest tariff push, part of a far more aggressive trade agenda in his second term, has raised levies with China to levels not seen in a century. The IMF cited both US-China tensions and the war in Ukraine as examples of geopolitical shocks affecting global markets.