The International Monetary Fund on Thursday issued a stern warning that said current fiscal policies of the U.S. could soon hurt the country’s and the global economy.
The IMF said in a report that policies driven by the Republican-led Congress and White House that cut taxes, increases government spending and impose new tariffs might cause economic harm around the world.
“This fiscal path will provide a near-term boost to the U.S. and to many of its trading partners,” the IMF said. “However, it also increases the range and size of future risks, both for the U.S. and for the global economy.”
The group said these policies will accelerate the rise of the national debt and that public debt will top 90 percent of annual gross domestic product of the U.S. by 2024.
President Donald Trump has announced new tariffs on imports of steel, aluminum and other products, even for some of the nation’s closest allies like Canada. During a press conference Thursday in Washington, D.C., Christine Lagarde, the IMF Director, said the tariffs will have wide-reaching impacts, especially if other nations impose retaliatory tariffs.
“Let us not understate the macroeconomic impact,” she said.
Currently, the IMF said that the U.S. economy is healthy, with unemployment levels at their lowest points in 50 years.
“The near-term outlook for the U.S. economy is one of strong growth and job creation,” the report said.
Steven Mnuchin, Trump’s Treasury chief, rejected the forecasts.
“While we appreciate the IMF’s work on their report and share similar short-term forecasts on U.S. economic growth, we differ significantly on the medium and long-term projections,” Mnuchin said in a statement.
The Treasury Department argued that the White House’s fiscal plan will actually lead to more growth in the future.
By Barry Eitel in San Francisco