Global trade imbalances are showing little sign of narrowing, a trend that could inflame tensions and curb growth, the International Monetary Fund warned.

Current-account balances amounted to 3.25 percent of the world’s gross domestic product last year, roughly unchanged from the previous year, the IMF said in its annual external-sector report, which assesses the trade position and exchange rates of the world’s biggest economies.

The IMF found that about 40 percent to 50 percent of last year’s current-account balances are excessive, meaning they can’t be justified by a nation’s economic fundamentals and ideal policies.

“Large and sustained excess external imbalances in the world’s key economies -- amid policy actions detrimental to external balances -- pose risks to global stability,” said the Washington-based fund.

Tax cuts and increased government spending in the U.S. are fueling a rise in borrowing rates, a stronger U.S. dollar and a growing American current-account deficit, according to the IMF. These trends risk aggravating trade tensions and disrupting emerging markets by causing rates to rise faster than expected, it said.

Over the medium term, sustained current-account deficits could limit global growth and result in “sharp and disruptive currency and asset-price adjustments,” the fund said.

President Donald Trump is on a mission to reduce America’s $552-billion trade deficit by slapping tariffs on everything from washing machines to handbags from China. Last week, the president said he’s ready to impose duties on effectively all Chinese imports into the U.S. He also accused China and the euro area of manipulating their currencies, and complained that a strong dollar was blunting his nation’s competitive edge.

The dollar was overvalued 8 percent to 16 percent last year, the IMF found. The euro was undervalued by as much as 8 percent, while the yuan was “broadly consistent with fundamentals,” with the fund’s assessment falling between 13 percent undervalued and 7 percent overvalued.

But the IMF report found that interventions by countries in foreign-exchange markets remained “muted” last year, with Thailand’s accumulation of reserves standing out.

The fund also notes that current-account imbalances are increasingly becoming concentrated among rich nations, as surpluses shrink in China and among crude exporters.

The U.S. remained the biggest borrower nation in the world last year, the IMF said. A weaker pound helped narrow the U.K. current-account deficit, while deficits widened in India, Argentina and Turkey.

The IMF said current-account surpluses were “substantially stronger” than justified in Germany, the Netherlands, Singapore and Thailand. The gap was stronger than necessary in Malaysia and “moderately stronger” in China, South Korea and Sweden, the fund said.

Countries with big surpluses, such as Germany and the Netherlands, should step up government spending to reduce imbalances, the IMF said, adding that the U.S. should tighten fiscal policy over the medium term.

The IMF was conceived during the Second World War to promote the balanced growth of trade and exchange-rate stability among its members, which now include 189 countries.