economy

January 19, 2026

IMF warns against Europe-US trade tit-for-tat

Escalating tariffs over Greenland could materially impact the world economy, the International Monetary Fund has warned

IMF warns against Europe-US trade tit-for-tat

TL;DR

  • The IMF warns that escalating tariffs between the US and Western Europe over Greenland could harm global economic growth.
  • IMF Chief Economist Pierre-Olivier Gourinchas stated there are "no winners in a trade war" and urged for an amicable solution.
  • US President Donald Trump announced a 10% tariff on imports from eight European NATO nations opposing his bid for Greenland.
  • The EU had prepared a retaliatory tariff package, the "trade bazooka," which could be deployed if no agreement is reached.
  • A previous tentative US-EU trade deal had reduced trade tension, mitigating negative economic effects.
  • The IMF projects global economic growth to remain resilient, with rates around 3.3% for 2026 and 3.2% for 2027.

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