Musings from Washington: World Bank/IMF meetings end amid uncertainty as Trump’s tariff policies reverberate

On a drizzling Friday afternoon in Washington DC, Kristalina Georgieva, the Director-General of the International Monetary Fund (IMF), walked gently through the sparsely occupied auditorium of the IMF headquarters with some aides and participants as the meetings of global finance leaders tapered off—–almost in a slow motion.

It was difficult to read her mind, given the complexities of the numerous programmes held throughout the week: Governors’ talks, panel discussions, capacity development events, seminars and workshops.

Yet, if the one thing that clouded discussions at the 2025 Spring Meetings was a reflection of her thought processes, the answer might not be difficult to decipher: Uncertainty.

The IMF headquarters is located on Pennsylvania Avenue, three blocks west of the White House, the United States’ seat of power where President Donald Trump made far-reaching pronouncements that have thrown confusion and uncertainty into the midst of hundreds of development experts, central bank governors, finance ministers and global business leaders gathered at the IMF and World Bank Headquarters for the Spring Meetings.

However, the short distance between the White House and IMF/World Bank buildings notwithstanding, the occupants do not seem to align in their thoughts and actions regarding how best to deepen multilateralism and engender developments around the world.

Mr Trump and some world leaders—most notably China—have been locked in a battle of reciprocal tariffs in recent weeks, sending shockwaves through markets and the global economy. The US President slapped a 134 per cent tax on Chinese imports as part of his “Liberation Day” that set a minimum 10 per cent levy on nearly all of America’s trading partners. Beijing retaliated by hiking its levies on imports of United States goods to 125 per cent, hitting back at Mr Trump’s decision to single out the world’s second-biggest economy for higher duties.

The decision paved the way for a chain of events that has now thrown the trading world into confusion, reverberating far beyond the skyscrapers of Washington, DC.

A week of anxiety, uncertainty

Within the week, the IMF and World Bank released key reports about the ripple effects of the economic fallout from the US tariffs, especially for poor economies, all pointing in the direction of an uncertain future.

For instance, the IMF slashed growth forecasts for most countries in its World Economic Outlook but stopped short of predicting a global recession, saying, “Our new growth projections will include notable markdowns, but not recession.”

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It, however, warned that global share prices have dropped “as trade tensions flared” and there will be an “erosion of trust” among countries.

The Fiscal Monitor report, which divides the world into three major groups (namely 41 advanced economies, 96 emerging market and middle-income economies, and 58 low-income developing countries), warned of escalating uncertainty and policy shifts reshaping the fiscal outlook.

“Global public debt projections have been revised upwards, while tariffs, uncertainty and market volatility, increased defence spending, and challenging foreign aid are intensifying risks,” the report said.

“Countries must implement gradual fiscal adjustments within credible medium-term frameworks to reduce debt and build buffers against heightened uncertainty. Reforms to major expenditure programs, such as energy subsidies and pensions, are crucial to reducing fiscal vulnerabilities while fostering growth.”

The Global Financial Stability Report warned that global financial stability risks have increased significantly. It identified three key forward-looking vulnerabilities: (i) valuations remain high in some key markets; (ii) some highly leveraged financial institutions and their nexus with banking systems; and (iii) risks of market turmoil and challenges to debt sustainability for highly indebted sovereigns. It ultimately warned that “major geopolitical risk events can trigger a significant decline in stock prices and raise sovereign risk premiums, thereby posing a potential threat to macro-financial stability.”

The regional outlook reports were no less concerning: The IMF said the hard-won recovery in sub-Saharan Africa, for instance, has been overtaken by recent events. “The sudden shift in the global outlook has clouded the region’s short-term prospects and made policy even more challenging,” the report said.

On his part, the World Bank President, Ajay Banga, told developing countries to strike swift trade deals with the United States at the “earliest possible” opportunity. “You need to negotiate trade systems with the US at the earliest possible (opportunity),” he told AFP. “If you delay, it hurts everyone.”

IMF’s Ms Georgieva echoed similar sentiment elsewhere in a separate interview with reporters during the week, noting that member countries were anxious about the shock to a global economy buffeted by pandemic, inflation and wars but held out hope that trade negotiations would ease the tariff tensions.

“We recognise that there is work underway to resolve trade disputes and reduce uncertainty. Uncertainty is really bad for business, so the sooner there is this cloud that is hanging over our heads is lifted, the better for profit, for growth, for the world economy,” she said.

Tarrying Trump

Amid the melee, President Trump hasn’t particularly shown much intent to collaborate with the World Bank or IMF since he assumed power, which is in line with the pursuit of his government’s protectionist policies.

In January, the United States announced its withdrawal from the World Health Organisation (WHO) and, in a similar fashion, withdrew from the Paris Climate Agreement. In its notice of withdrawal from WHO, the US said it expressed the same sentiment in 2020 due to the organisation’s alleged “mishandling of the COVID-19 pandemic that arose out of Wuhan, China, and other global health crises, its failure to adopt urgently needed reforms, and its inability to demonstrate independence from the inappropriate political influence of WHO member states.”

Mr Trump’s protectionism sends signals of anxiety and uncertainty to both the IMF and World Bank. For one, the White House has yet to name executive directors to both bodies, even as uncertainty deepens and stalls progress because the US retains the largest voting share in both the IMF and World Bank, enjoying effective veto power over major decisions.

The Trump administration hasn’t particularly had it smooth with the two multilateral organisations either, raising fears of pre-election worries about a Project 2025 proposal for the US to pull out of the IMF and World Bank.

Although Mr Trump has repeatedly denied it, the proposal is part of a plan created by the Heritage Foundation as a possible handbook for the Republican administration.

The insipid relationship between Mr Trump and multilateral organisations like the IMF is nearly the same as that of the World Trade Organisation (WTO), which is at the centre of the trading disputes and tariff wars that have roiled financial markets, sent volatility surging and spooked investors and consumers across different parts of the world.

Earlier, WTO DG Ngozi Okonjo-Iweala had noted that the WTO’s initial estimates suggested that the measures, “coupled with those introduced since the beginning of the year, could lead to an overall contraction of around 1% in global merchandise trade volumes this year, representing a downward revision of nearly four percentage points from previous projections.”

Speaking to Nigerian journalists on Friday, Mrs Okonjo-Iweala—whose nomination in 20202 was opposed by the US government under Mr Trump –appealed to the US to take into account the effects of its tariff policies on least-developed countries, calling for review and negotiations.

However, the signs seem ominous in the short term, despite all efforts to restore sanity to the trading world.

Reuters reported during the week that many finance and trade ministers sought to meet with US Treasury Secretary Scott Bessent and other key Trump administration officials, to no avail, adding that not a single deal was finalised over the course of the week despite Mr Trump administration touting negotiations and proposals.

Polish Finance Minister Andrzej Domanski told the medium that there was no negotiation but mere “discussions” during the week. “…(T)his uncertainty is bad for Europe, for the U.S. I mean, it’s actually bad for everyone,” the minister added, giving credence to the absence of any concrete negotiations—even though the spring meetings were held some metres away from the White House.

Bland outlook

The next meetings of the World Bank and IMF will be held in October, but expectations are high, and experts are waiting with bated breath amid the tensions generated by the trade war.

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Mr Trump, earlier in April, announced a complete three-month pause on all the “reciprocal” tariffs that went into effect at midnight, with the exception of China, which had reciprocated with a similar, much higher tariff pronouncement.

The US President recently said he is unlikely to grant another 90-day pause on the tariffs but expects to be able to strike trade deals with a range of countries.

At the press briefing on the global policy agenda, Ms Georgieva sent a more optimistic signal to the world.

“Finally, we will reiterate the need for continued cooperation in a multipolar world. The shared objective for all must be a better balanced and more resilient world economy,” she said, as the curtain drew gently on the meetings and participants moved out of Washington—–perhaps with more questions than answers about the direction of global trade in the coming months.