The International Monetary Fund (IMF) on Thursday, 9 July reaffirmed its support for open markets and free trade, even as tariff barriers and economic nationalism continue to reshape the global trading order. The Fund maintained that international trade remains indispensable for raising living standards and reducing poverty — while conceding that the dividends of globalisation have not been distributed evenly.

IMF's Core Position on Free Trade

Julie Kozack, Director of the IMF's Communications Department, made the remarks at the Fund's regular press briefing in Washington. 'We continue to support open markets and trade,' Kozack said. 'We think that they're important to raise global living standards and reduce poverty, and we've seen some of those positive impacts globally.'

Her comments came in direct response to a question on United States tariff policy — specifically the expected transition from broad global tariffs imposed under Section 122 of the US Trade Act to country-specific measures under Section 301 — and whether the IMF's stance had shifted amid mounting economic-security concerns.

Acknowledging the Uneven Spread of Globalisation

While defending the architecture of open trade, Kozack acknowledged that integration has produced uneven outcomes for many economies and communities. 'We have also recognised that the benefits of globalisation and of integration have not always been evenly shared,' she said.

According to Kozack, job losses, wage pressures, and widening inequality have accompanied shifts in global trade patterns in several countries. 'Some countries have faced job losses. They face wage pressures. Inequality has increased. There's been concerns about a level playing field and unfair competition,' she said. The Fund's position, she stressed, is that these concerns reinforce — rather than undermine — the case for ensuring the trading system works more equitably. 'I think we recognise the benefits of the integrated system, but we also realise that in order to make that system really work, it's important that the benefits are evenly shared and that the playing field is level,' Kozack added.

Fiscal Impact of US Tariffs

The IMF also weighed in on the revenue implications of US tariffs, drawing on its latest Article IV assessment of the American economy. Tariffs are expected to generate additional government revenue equivalent to 0.7 per cent of US GDP in fiscal year 2025-26, according to the Fund's estimates.

However, Kozack cautioned that those gains are unlikely to be sustained. 'We also noted that we expected that those revenues may decline over time as trade is reallocated and as import substitution takes hold,' she said. The observation points to a structural limitation of tariffs as a long-term fiscal tool — a point that critics of protectionist policy have repeatedly raised.

Broader Context: Security vs. Open Trade

The IMF's remarks arrive at a moment when governments worldwide are increasingly weighing free trade against national security imperatives, supply-chain resilience, and the protection of strategic industries. Several major economies have imposed or expanded tariffs in recent years, arguing that economic security is now inseparable from national security. This comes amid a broader fragmentation of the rules-based multilateral trading system that the IMF and institutions like the World Trade Organisation (WTO) have long championed.

Notably, the tension between open-market principles and protectionist pressures has intensified since the onset of US-China trade friction and accelerated further following pandemic-era supply-chain disruptions. The IMF's reaffirmation signals that the Fund has no intention of retreating from its foundational pro-trade stance, even as the geopolitical environment grows more complex.

How governments balance these competing pressures — and whether multilateral frameworks can be reformed to address the inequality concerns the IMF itself has flagged — will be a defining question for the global economy in the years ahead.