IMF Slashes Global Growth Outlook Amid U.S. Tariff Impact
— IMF slashes global growth forecasts due to Trump's tariff policies, warning of rising inflation, weakened trade, and widespread economic slowdowns across major economies.
The International Monetary Fund (IMF) has significantly reduced its global economic growth forecast for 2025, attributing the downturn to the adverse effects of U.S. President Donald Trump's recent tariff policies. The revised projection anticipates a 2.8% growth rate, a decrease of 0.5 percentage points from the January estimate, marking the slowest expansion since the COVID-19 pandemic.
In its latest World Economic Outlook (WEO), the IMF also downgraded the 2026 global growth forecast to 3.0%, down 0.3 percentage points from earlier projections. These adjustments consider tariff measures implemented up to April 4, excluding subsequent increases that have raised U.S. tariffs on Chinese goods to 145%. If these elevated tariffs persist, the IMF warns of further deceleration in global economic activity.
Impact on the U.S. Economy
The IMF has lowered its 2025 growth forecast for the United States to 1.8%, a 0.9 percentage point drop from January's projection. Growth is expected to slow further to 1.7% in 2026. The report attributes this slowdown to increased policy uncertainty, trade tensions, and reduced demand momentum. Additionally, U.S. inflation is projected to rise to 3.0% in 2025 and 2.5% in 2026.
Global Trade and Inflation Concerns
The IMF notes that the recent U.S. tariff announcements have more than halved its outlook for global trade growth this year. Consequently, world consumer prices are expected to increase, with inflation forecasts adjusted to 4.3% for 2025 and 3.6% for 2026.
Effects on Major Economies
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China: The world's second-largest economy is projected to grow by 4.0% in 2025, down from 5.0% in 2024. Increased government spending is anticipated to be insufficient to counteract the impact of new tariffs.
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Mexico: The Mexican economy is now expected to contract by 0.3% in 2025, a 1.7 percentage point reduction from January's forecast.
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Canada: Growth projections have been sharply reduced, reflecting the negative impact of U.S. tariffs.
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Japan: The economy is anticipated to grow by just 0.6% in both 2025 and 2026, a significant cut from previous estimates.
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Euro Area: Growth is forecasted at 0.8% in 2025 and 1.2% in 2026, with Germany expected to experience no growth in 2025.
Call for Policy Action
IMF Chief Economist Pierre-Olivier Gourinchas emphasized the need for countries to engage in negotiations to mitigate the adverse effects of current trade policies. He stated, "Growth prospects could improve immediately if countries ease their current trade policy stance and implement clear and predictable trade rules."
The IMF's revised outlook underscores the significant risks posed by escalating trade tensions and highlights the importance of cooperative international economic policies to sustain global growth.
