Members of the International Monetary Fund and World Bank meet in Washington this week, with America’s isolationism and Donald Trump’s trade war on everyone casting a shadow over the global economy and the future of two multilateral institutions that play critical roles in the global economy and financial system.

Trump’s tariffs will impact global economic growth materially. How materially is uncertain, given that their magnitude and coverage changes from one Trump social media post to another. That they will have a negative impact on the US economy and the rest of the world this year and beyond is, however, a certainty.

Donald Trump cannot simply announce a partial freeze on tariffs and expect investors in the bond market to forget that he ever declared a global trade war.Credit: Getty Images

The IMF will release its latest projections for global growth at the meeting, with its managing director, Kristalina Georgieva, saying last week that they will contain “notable markdowns, but not recession” from the 3.3 per cent global growth rate for this year and next, that IMF economists forecast in January.

The World Trade Organisation lowered its forecast for this year’s growth only last week, dropping it from 2.8 per cent to 2.2 per cent to consider the impact of the tariffs.

The biggest influence on the changes in outlook is that, where economists saw a continuation or even acceleration in the rate of growth in the US economy this year and next, as Trump’s tax cuts and deregulation provided a boost, they now see a significant slowdown, even a US recession, because of the tariffs, the uncertainty and inflation they will generate and, consequently, their impacts on business investment and consumer spending.

Georgieva warned that the impact of the tariffs could be greater if they undermined the stability of the global financial system.

Trust in the US financial system hasn’t been helped by Trump’s continuing attacks on Federal Reserve Board chairman, Jerome Powell.

She noted that, within the US bond market – which is at the heart of the global financial system – yields on........

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