Tariff tensions cast long shadow over IMF-World Bank Spring Meetings

This year's Spring Meetings of the IMF and World Bank are taking place in Washington DC (21–26 April) against a backdrop of global trade disruptions and mounting fears of a growth slowdown, triggered by US President Donald Trump's aggressive tariff policies. Although a 90-day pause on new tariffs began on April 9, the conflict remains unresolved. A baseline 10% tariff still applies to imports from countries with trade surpluses with the US, while levies on Chinese goods have risen further—some reaching up to 145%—prompting retaliatory measures and deepening uncertainty about what lies ahead when the pause expires.

This year's meetings must go beyond routine agenda-setting. Member countries are expected to confront US officials directly over tariff issues, while the IMF faces pressure to recalibrate its stance in light of America's increasingly protectionist posture. As the largest contributor to both institutions, the US exerts significant influence over their policy directions.

The ripple effects of the tariff war extend far beyond trade. The US's shift toward economic nationalism is challenging the multilateral system, prompting many finance leaders to rethink strategies for a safer, more stable global economy. Delegations this year include trade officials and diplomats to navigate the sensitive tariff agenda during sideline meetings.

Ahead of the sessions, IMF Managing Director Kristalina Georgieva warned that global economic resilience is under threat from intensifying trade distortions, a weakening multilateral system, and renewed market volatility. The IMF has already downgraded its global growth forecast, citing tariff-related disruptions, and the World Bank has echoed similar concerns.

The outlook is particularly grim for Bangladesh. Both the IMF and World Bank project lower growth, higher inflation, and rising poverty. The World Bank warns that FY2025 could mark the slowest economic growth in Bangladesh in 36 years. With falling investment, high inflation, and declining real wages, as many as 3 million people could fall into poverty.

These dire projections bolster Bangladesh's case at the meetings. Led by Finance Adviser Salehuddin Ahmed, the Bangladeshi delegation plans to seek expedited disbursement of committed funds. It will also push US officials for zero-duty access to key exports and a restoration of GSP benefits, citing improved labour standards. Bangladeshi exports to the US currently face a steep weighted average tariff of 15.2%, compared to just a 1.62% weighted average tariff on American goods entering Bangladesh. While enjoying duty-free access to the EU and other developed markets, Bangladesh's core export—ready-made garments—remains excluded from the US zero-tariff list, a point the delegation is expected to raise.

According to latest reports, Bangladesh team, which includes central bank Governor Ahsan H Mansur, has already had talks with the IMF to resolve the issues, including introduction of fully market-based exchange rate, to get the lender's next two installments of $4.7 billion loan package disbursed. Meanwhile, chief adviser's special envoy on international affairs Lutfey Siddiqi in his meeting with Assistant US Trade Representative Brendan Lynch elaborated on Bangladesh's initiatives to ease imports from USA and improve labour standards.

Global stakeholders in a trade standoff

Nations worldwide are lobbying the US to ease its tariff stance while quietly ramping up imports of American goods to maintain access to the world's largest consumer market. Japan, hit with pending tariffs of up to 24%, is particularly squeezed due to its strong trade ties with both the US and China. Japanese Finance Minister Katsunobu Kato, now in Washington, is expected to raise these concerns with US Treasury Secretary Scott Bessent.

While Trump has momentarily softened his rhetoric, claiming relations with China and other countries are "doing fine," his reassurances have done little to ease market concerns. China is actively building alliances—with the EU, UK, and Australia—to defend the multilateral system. Once a reluctant WTO member, China now champions the rules-based trade order from which it has greatly benefited.

The tariff war has also pushed China and Vietnam into closer cooperation, with recent agreements signed in strategic areas such as ports and AI. During a visit to Vietnam, Chinese President Xi Jinping warned starkly, "There will be no winner in a trade war."

With the US, China, and Japan holding significant sway over the IMF, the institution finds itself in a delicate position. As it works to uphold macroeconomic stability and financial cohesion, the IMF faces one of its most challenging moments since its post-WWII founding. While not yet an existential crisis, the current standoff threatens the Fund's ability to maintain its policy independence and core mission. Restoring faith in the multilateral order may now become one of its most urgent imperatives.

A strong and independent IMF and World Bank is crucial not only to meet funding needs of emergency economies like Bangladesh, but also to protect multilateral systems to help them spur growth and fight poverty.