IMF urges US to change course on economic policy

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The IMF has taken aim at the Trump administration’s economic policies, attacking US tariffs and warning that the role of the country’s statisticians, supervisors and tax collectors needs to be respected.

The fund said in a statement that the administration of President Donald Trump should deploy “a different set of policies” to avoid the negative economic consequences of tariffs, following a round of meetings that formed part of the IMF’s check on the US economy.

Kristalina Georgieva, the fund’s managing director, said that while the fund shared the Trump administration’s concern about the size of the US’s trade deficit, tariffs had a “negative supply effect” and acted as “a headwind to even stronger growth”. 

Trump has doubled down on his tariff policy since the US Supreme Court ruled his use of emergency power to impose some levies was illegal.

The IMF review was concluded before the court ruling, but the fund’s forthcoming health check — known as the Article IV consultation — will feature an analysis of the court decision and the new tariffs unveiled in response.

“We expect to see more clarity given by the administration . . . and in the coming weeks [we will have] more to say,” Georgieva said. 

IMF officials also criticised the administration’s sweeping job cuts across the federal workforce.

“We’ve seen a very significant reduction in federal employment, wherein 15 per cent of the federal workforce has been lost over the past year,” said Nigel Chalk, director of the IMF’s western hemisphere department.

“We want to make sure that that doesn’t have an impact on several key functions, like regulatory oversight, like statistics agencies.” 

Chalk added that tax collection and government statistics were “often underfunded” in the US and elsewhere despite “very much [creating] a very important public good, that we feel should be invested in”. 

Several senior officials at the Internal Revenue Service have lost their jobs since Trump returned to the White House.

The US president also fired Erika McEntarfer, commissioner of the Bureau of Labor Statistics, over unfounded allegations that the agency’s influential jobs data was politically manipulated. 

The US Federal Reserve’s vice-chair for supervision, Michelle Bowman, a Trump appointee during his first term, has said she plans to cut 30 per cent of Washington-based regulatory staff. 

“Strong institutions provide the foundation for good policy decisions, especially when it comes to understanding what is going on in the country,” Georgieva said.