Trump’s Trade War Threatens To Push Global Debt Beyond Pandemic Peak By 2030, IMF Warns

Global public debt is set to cross pandemic levels by the end of the decade, driven by mounting fiscal pressures and new U.S. trade tariffs, according to the International Monetary Fund (IMF). 

In its Fiscal Monitor report, released Wednesday, the IMF projected that global debt levels are expected to rise 2.8% this year to 95.1% of global GDP in 2025, a sharp increase from earlier estimates. 

The IMF said its projections reflect recent tariff actions announced between Feb. 1 and April 4, including those implemented by the Trump administration. 

It added that global debt will climb to 99.6% of world GDP by 2030, surpassing the pandemic peak and underscoring growing concerns about sovereign fiscal sustainability.

The Fund cited slower economic growth, elevated interest rates, and increased spending resulting from geopolitical fragmentation and trade disruptions as the primary drivers.

In a severe downside scenario – factoring in policy shocks and adverse financial conditions – public debt could reach 117% of global GDP by 2027, exceeding levels seen during World War II, according to the IMF’s report.

“Tighter and more volatile financial conditions in the United States may have ripple effects on emerging markets and developing economies,” it said, warning of elevated financing costs and heightened debt vulnerabilities.

Despite the global picture, the IMF noted a modest improvement in the U.S. fiscal outlook. The country’s federal deficit is projected to narrow to 6.5% of GDP in 2025 from 7.3% in 2024. 

The reduction is “contingent on higher tariff revenues,” although the Fund emphasized that the magnitude of this contribution remains “highly uncertain.”

On Tuesday, the IMF reduced its U.S. growth forecast to 1.8%, down from 2.7% in January, citing tariffs imposed on April 2 and their knock-on effects. The Fund also raised the odds of a U.S. recession to 40%, up from 25% in October.

Since Trump’s tariff announcement on April 2, U.S. equity markets have struggled. The Invesco QQQ Trust (QQQ), which tracks the Nasdaq 100, is down more than 1.8%, while the SPDR S&P 500 ETF Trust (SPY) has declined 2.9%. The SPDR Dow Jones Industrial Average ETF (DIA) has fallen over 4%.

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Read also: Trump Tariffs Prompt IMF To Cut US And Global Growth Forecasts, Raise Recession Risk

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