IMF: U.S., Global Growth Outlook Falls Due to Trump Tariff Pressures

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IMF: U.S., Global Growth Outlook Falls Due to Tariff Pressures/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ The IMF cut global growth projections due to Trump’s tariffs and trade policy uncertainty. U.S. growth is forecast at just 1.8% in 2025, with higher recession risks. Tariffs are dampening business confidence worldwide, especially in China and Europe.

FILE – People are silhouetted as they pass The Bank of England in London, Thursday, April 3, 2025. (AP Photo/Kirsty Wigglesworth, File)

Global Economy Faces Slowdown Amid Trump Tariffs: Quick Looks

Global Growth Downgrade: IMF now expects global GDP to grow 2.8% in 2025, down from 3.3%.
U.S. Growth Slows Sharply: Forecast revised to 1.8%, with rising recession risks.
Trump Tariffs Impact: Sweeping import duties on 60+ countries disrupt trade confidence.
Recession Odds Up: IMF raises U.S. recession risk to 37%; JPMorgan estimates 60%.
China Takes a Hit: Growth downgraded to 4% for 2025, citing falling U.S. exports.
Investment Uncertainty: Businesses hesitant to invest amid volatile U.S. trade policy.
Europe Fares Slightly Better: EU growth reduced only modestly thanks to public spending.
Inflation Set to Rise: U.S. inflation expected to reach 3% by year-end.

Workers assemble the Zeekr 001 EV models at the Chinese automaker Zeekr assembly plant, in Ningbo, east China’s Zhejiang Province, Wednesday, April 17, 2025. (AP Photo/Andy Wong)

IMF Says U.S., Global Growth Outlook Falls Due to Trump Tariff Pressures

Deep Look

WASHINGTON — The global economy is entering a more fragile period as uncertainty surrounding President Donald Trump’s aggressive trade policies triggers widespread economic slowdowns, the International Monetary Fund (IMF) said Tuesday.

In its latest World Economic Outlook, the IMF slashed its forecast for global growth to 2.8% in 2025, down from 3.3% earlier this year. Growth in 2026 is projected at just 3%, also a downgrade. The stark revision comes in the wake of the Trump administration’s sweeping tariffs on imports from over 60 countries — measures the IMF says are chilling investment and disrupting supply chains.

“This global economic system that has operated for the last eighty years is being reset,” said Pierre-Olivier Gourinchas, IMF chief economist.

U.S. Outlook Weakens Significantly

The IMF now forecasts U.S. GDP growth at 1.8%, a sharp downgrade from its January estimate of 2.7%. The Fund also increased the likelihood of a U.S. recession to 37%, up from 25% earlier. For comparison, JPMorgan analysts estimate the risk at 60%.

Although a recession is not the base case, the economic drag from tariffs, inflationary pressures, and investor uncertainty are taking a toll. Many U.S. firms, the IMF warned, are likely to delay hiring and expansion plans while trade policies remain unclear.

The U.S. economy is experiencing what Gourinchas called a “supply shock” — similar to pandemic-era disruptions — as tariffs drive up costs and restrict global sourcing. Inflation is expected to rise to 3% by the end of 2025, reversing earlier declines.

Trump’s Tariff Policy at the Center

The updated forecasts were finalized on April 4, just days after Trump announced universal 10% tariffs and additional levies targeting dozens of nations. While a 90-day pause was declared on April 9 to allow for negotiations, the IMF said the damage to investor sentiment had already been done.

“The pause didn’t significantly change our projections,” Gourinchas said. “The escalation between the U.S. and China alone created enough headwinds to warrant a downgrade.”

Many companies are still reeling from tariff hikes imposed earlier in Trump’s presidency. The new rounds — even temporarily suspended — further amplify uncertainty, prompting firms to freeze capital spending and reconsider global supply strategies.

China, Europe, and Japan Also Slow

China’s growth forecast was trimmed to 4% for 2025 and 2026, down by half a percentage point. While the U.S. faces supply constraints, China is expected to see demand shrink, especially as American consumers scale back on Chinese goods.

The European Union, though not hit as hard as China, also saw modest cuts. The eurozone’s 2025 GDP is expected to rise just 0.8%, with 1.2% growth projected for 2026 — both figures 0.2% lower than previous estimates. Public investment, particularly in Germany, is expected to soften the blow of the tariffs.

Japan’s growth, meanwhile, is forecast at 0.6% for both 2025 and 2026 — down from 1.1% and 0.8%, respectively. The island nation remains vulnerable to global trade swings and weakening domestic demand.

Why It Matters

The IMF’s downgrade underscores the broad risks of escalating trade tensions. Beyond tariffs, uncertainty surrounding U.S. policy under Trump has rattled global markets and dampened the optimism seen in early 2024.

“We are witnessing a fundamental shift in how countries engage economically,” said Gourinchas. “Whether that leads to a more stable system or continued disruption depends on the choices leaders make now.”