IMF warns of escalation of US-Europe tariff dispute over Greenland
Pierre-Olivier Gourinchas, the IMF’s chief economist, shared his concerns on Monday during the release of the updated 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 emphasized that “there are no winners in a trade war,” urging both parties to pursue an “amicable solution.”
The alert follows a series of threats between the US and the EU. US President Donald Trump had announced a 10% tariff, starting February 1, on goods from eight European NATO countries that opposed his efforts to acquire Greenland. This move reportedly prompted the EU to prepare a set of retaliatory tariffs, dubbed the “trade bazooka,” targeting American imports.
The €93 billion countermeasure had originally been designed last year in response to Trump’s initial tariffs but was temporarily set aside after a tentative US-EU trade agreement was reached last summer. An EU diplomat noted that the package could “automatically come back into force on February 6” if no new deal is finalized.
Gourinchas pointed out that the initial agreement had helped reduce trade tensions, easing the potential impact on the global economy and mitigating the negative projections that had accompanied the first tariff announcements.
These developments come as international leaders prepare to convene in Davos, Switzerland, for the annual World Economic Forum.
According to the IMF’s updated World Economic Outlook, global growth is projected to remain steady, with estimates of 3.3% for 2026 and 3.2% for 2027, closely matching the 3.3% growth recorded in 2025. Analysts attribute last year’s economic performance in part to a surge in investments in artificial intelligence.
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