London
CNN
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President Donald Trump’s unpredictable tariff policy and countermeasures by America’s trading partners will likely deal a heavy blow to economies worldwide, with US prosperity hit particularly hard, the International Monetary Fund warned Tuesday.
Global economic growth will slow to 2.8% this year, from 3.3% last year and significantly below the historical average, the IMF forecast in its World Economic Outlook.
The slowdown expected in the United States is even steeper, with its economy likely to grow only 1.8% in 2025, compared with a 2.8% expansion in 2024.
Both predictions are more pessimistic than the fund’s January projections, which came before Trump’s flurry of tariff announcements took America’s average import tax to its highest level in a century.
“The swift escalation of trade tensions and extremely high levels of policy uncertainty are expected to have a significant impact on global economic activity,” the Washington, DC-based institution said. And risks to the global economy are “firmly tilted to the downside,” it added.
Trump’s new tariffs account for almost half of the sharp downgrade in the IMF’s US growth forecast for this year, Pierre-Olivier Gourinchas, the IMF’s chief economist, wrote in a blog post, noting that uncertainty over policy dented demand in the US even before the recent tariff announcements.
North America, just like all regions, can’t expect any upside from the tariffs further down the line. “The long-term impact of the tariffs, if they are maintained, (will be) negative for all regions, just like the short-term impacts,” Gourinchas told reporters Tuesday.
Gourinchas also said that “central bank independence remains a cornerstone.” The comment comes just a day after Trump attacked US Federal Reserve Chair Jerome Powell as a “major loser,” part of his continuing campaign to pressure the central bank chief to cut interest rates.
The latest World Economic Outlook was put together under “exceptional” circumstances, the IMF said. Trump’s April 2 unveiling of sweeping tariffs “forced us to jettison our projections — nearly finalized at that point,” it wrote.
Underscoring the importance of trade to the economic outlook, the IMF said a ratcheting up of trade tensions, along with even more questions about where trade policies are headed, could further reduce growth, whereas “de-escalation from current tariff rates and new agreements providing clarity and stability in trade policies” could do the opposite.
This is a developing story and will be updated.
