IMF reaffirms free trade stance as global tariffs rise

IMF spokesperson Julie Kozack on Wednesday defended free trade at a press briefing, saying open markets raise living standards despite rising tariff barriers.socialnews
The Fund's July World Economic Outlook update cut 2026 global growth to 3.0% and projected world trade growth slowing sharply from 2025 levels.reuters+1
Kozack said U.S. tariff revenue gains of 0.7% of GDP are likely temporary, as trade reallocation and import substitution erode returns over time.socialnews

The International Monetary Fund on Thursday reaffirmed its commitment to free trade and open markets, even as governments worldwide continue to expand tariff regimes and pursue economic nationalism. The remarks came during a week in which the Fund also lowered its 2026 global growth forecast and warned of slowing world trade.

Kozack Defends Open Markets

Speaking at the IMF's regular press briefing on July 9, Communications Director Julie Kozack said the Fund's position in favor of open trade remains unchanged despite an increasingly protectionist environment.imf+1

"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".socialnews

Her comments responded to questions about U.S. tariff policy, including the expected transition from global tariffs imposed under Section 122 of the U.S. Trade Act to country-specific tariffs under Section 301. Kozack acknowledged that globalization has produced uneven outcomes, with some countries facing "job losses," "wage pressures," and rising inequality, but said those concerns do not diminish the case for maintaining an open trading system.socialnews

Tariff Revenue Gains May Be Temporary

Kozack also addressed the fiscal impact of U.S. tariffs. Citing the Fund's latest Article IV assessment of the United States, she said tariffs are expected to generate additional government revenue equivalent to 0.7 percent of U.S. GDP in fiscal year 2025–26.cnbc+1

However, she cautioned that those gains are unlikely to persist. "We also noted that we expected that those revenues may decline over time as trade is reallocated and as import substitution takes hold," Kozack said.socialnews

Broader Trade Slowdown

The briefing followed the release of the IMF's July 2026 World Economic Outlook Update, which projected global growth of 3.0 percent this year — down from 3.5 percent averaged in 2024–25 — and warned of trade fragmentation as a continuing drag on activity. World trade volume growth is expected to slow sharply to 3.5 percent in 2026 from 5 percent in 2025, a year marked by heavy front-loading of imports ahead of U.S. tariffs, according to Reuters Thomson Reuters Corporation .reuters+2

The IMF left its 2026 U.S. growth forecast unchanged at 2.3 percent while cutting the euro area outlook to 0.9 percent. In 2025, the U.S. raised average tariff duties from 2.4 percent to 9.6 percent, bringing protectionism to its highest level in 80 years, according to a Brookings Institution analysis.finance.yahoo+1

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