IMF: US-Europe Greenland Tariff War Threatens Global Economic Growth
Pierre-Olivier Gourinchas, the IMF's chief economist, delivered cautionary remarks Monday during the unveiling of the revised World Economic Outlook (WEO) report.
"If we were to enter a phase in which there were escalation, and tit-for-tat policies, that would certainly have an even more adverse effect on the economy," he said. Gourinchas contended that "there are no winners in a trade war," pressing both parties to secure an "amicable solution."
The alert arrives amid mounting bilateral threats. US President Donald Trump declared a 10% tariff effective February 1 targeting imports from eight European NATO members opposing his Greenland acquisition initiative.
This move allegedly triggered the EU to activate retaliatory tariffs—characterized as the "trade bazooka"—aimed at US imports.
The €93 billion counter-strike package was originally developed last year following Trump's initial tariff offensive but remained dormant after a provisional US-EU trade agreement materialized last summer.
An EU diplomat informed media the package could "automatically come back into force on February 6" if no agreement is reached.
Gourinchas observed that the prior agreement diminished trade friction, which lessened the impact on the global economy and surpassed the pessimistic forecasts initially projected when tariffs were announced.
The statements emerge as international leaders prepare to convene in Davos, Switzerland, for the annual World Economic Forum.
The IMF's latest World Economic Outlook indicates global economic growth should maintain resilience. Forecasts predict a 3.3% rate for 2026 and 3.2% for 2027, comparable to the estimated 3.3% growth in 2025. Last year's economic performance benefited from a dramatic surge in artificial intelligence investment.
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