## TRADE RECKONING

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**Canonical URL:** [TRADE RECKONING](https://www.imf.org/-/media/files/publications/fandd/article/2025/06/pt.pdf)

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### Stalled integration and tariff rebound
- For decades, the global effective average tariff rate declined toward the US level, but it has long since stalled.
- Since the 2008 financial crisis, trade openness has stopped rising and global imports have leveled off at about a third of GDP.
- US tariffs in April reached the highest level in over a century.
- Trade tensions have escalated in 2025, and other countries have responded.

### Exposure and spillovers
- The United States, China, and the European Union have relatively low imports relative to GDP but are the world’s largest importers in absolute terms; shifts in their trade patterns create significant spillovers.
- Many smaller, trade-reliant countries are more exposed to shifts in trade patterns; smaller advanced economies and most emerging markets are more open to trade and rely on it more for growth.

### Trade policy uncertainty
- The Trade Policy Uncertainty Index has “skyrocketed.”
- The scatter plot and analysis use 2024 data; the Trade Policy Uncertainty Index uses monthly data; April reflects average to April 14.
- October 2024 = 100.

### Policy guidance: strengthen resilience and competitiveness at home
- Fortify macroeconomic fundamentals:
  - Rebuild fiscal buffers.
  - Maintain price stability.
  - Ensure financial soundness.
- Implement structural reforms to adapt and improve growth potential:
  - Boost productivity.
  - Lower barriers to private enterprise.
  - Attract investment.
- Address internal and external imbalances, particularly large deficits and surpluses, which have contributed to rising tensions.

*This article draws on an April 17, 2025, speech by IMF Managing Director kristalina georgieva.*

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_Source: https://www.imf.org/-/media/files/publications/fandd/article/2025/06/pt.pdf_