A rapid unraveling: Global economic leaders echo Trump on trade imbalances

• Leaders of major international organizations now warn the world has relied too much on the U.S. for economic growth, echoing White House calls for the rest of the globe to pick up the slack.

What they're saying: "Countries should renew their focus on internal and external macroeconomic imbalances," Kristalina Georgieva, the head of the International Monetary Fund, said yesterday.

• "[E]xternal surpluses and deficits can create fertile ground for trade tensions," Georgieva said in a speech titled "Toward a Better Balanced and More Resilient World Economy."

The World Trade Organization had a similar message this week.

• "Over-concentration — whether it's where we buy from or where we sell to — leads to over-dependence, making economies more vulnerable to shocks and fostering a sense of unfair burden sharing," Ngozi Okonjo-Iweala, the group's director, told reporters.
• "The U.S. has a point when it says too many countries are dependent on its market or the production of some critical inputs are too concentrated in certain sectors and geographies," Okonjo-Iweala added.

The big picture: That is a nod to countries that sell far more goods and services abroad than they buy from others.

• In the current protectionist era, that creates a huge new risk. Never before has the U.S. — the world's biggest consumer — threatened a sudden withdrawal from the global stage.

Between the lines: Trump and some top economic advisers believe that America has footed the global bill for too long.

• But the U.S. imports only what there is demand for. Domestic consumers get low-cost goods, while manufacturers can source cheap inputs as they focus on producing more complex products. Tariffs threaten those benefits.

"Horrendous imbalances have devastated our industrial base and put our national security at risk," Trump said before announcing the reciprocal tariffs that were paused exactly one week later.

• Stephen Miran, the chair of the Council of Economic Advisors, called for "improved burden-sharing at the global level" in a recent speech.

Threat level: The rapid unraveling of the global trading system will be painful, with no time for the most vulnerable nations to adjust.

• The WTO forecast this week that global trade will plummet this year and weigh on economic growth as a result of Trump's tariffs.
• The IMF will release its latest economic forecasts next week, which Georgieva said will include "notable markdowns."

The bottom line: "Smaller advanced economies and most emerging markets rely more on trade for their growth, and are thus more exposed," Georgieva said.