IMF backs free trade despite tariffs

Washington, July 9 (SocialNews.XYZ) The International Monetary Fund (IMF) on Thursday reaffirmed its support for free trade and open markets despite growing tariff barriers and rising economic nationalism, saying global trade remains essential for raising living standards and reducing poverty, even as it acknowledged that the gains from globalisation have not been shared equally.

Speaking at the IMF's regular press briefing, Julie Kozack, Director of the IMF's Communications Department, said the Fund's long-standing position in favour of open markets remains unchanged despite an increasingly protectionist global trading environment.

"We continue to support open markets and trade," Kozack said.

"We think that they're important to raise global living standards and reduce poverty, and we've seen some of those positive impacts globally."

Her remarks came in response to a question on the United States' tariff policy, including the expected transition from global tariffs imposed under Section 122 of the US Trade Act to country-specific tariffs under Section 301, and whether the IMF's position on free trade had evolved amid growing concerns over economic security.

While defending the benefits of international trade, Kozack acknowledged that globalisation has also produced uneven outcomes.

"We have also recognised that the benefits of globalisation and of integration have not always been evenly shared," she said.

According to Kozack, some countries and communities have experienced job losses, wage pressures and rising inequality as trade patterns have shifted.

"Some countries have faced job losses. They face wage pressures. Inequality has increased. There's been concerns about a level playing field and unfair competition," she said.

She said those concerns do not diminish the importance of maintaining an open international trading system but instead highlight the need for governments to ensure that its benefits are distributed more broadly.

"I think we recognise the benefits of the integrated system, but we also realise that in order to make that system really work, it's important that the benefits are evenly shared and that the playing field is level," Kozack said.

The IMF also commented on the fiscal impact of US tariffs. Referring to the Fund's latest Article IV assessment of the United States, Kozack said tariffs are expected to generate additional government revenue equivalent to 0.7 per cent of US GDP in fiscal year 2025-26.

However, she noted that those gains are unlikely to be permanent.

"We also noted that we expected that those revenues may decline over time as trade is reallocated and as import substitution takes hold," she said.

The comments come as governments around the world increasingly balance free trade with concerns over national security, strategic industries and supply-chain resilience. Several major economies have imposed or expanded tariffs and other trade restrictions in recent years, arguing that economic security has become an integral part of national security.

Source: IANS