U.S. President Donald Trump’s back-and-forth tariff drama is likely to decrease the rate of growth in economies across the world, the International Monetary Fund (IMF) said Tuesday.
In a blog Pierre-Olivier Gourinchas, chief economist at the IMF, noted that further trade tensions are likely to exacerbate risk to global economies.
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“If sustained, this abrupt increase in tariffs and attendant uncertainty will significantly slow global growth,” Gourinchas wrote.
The blog provides a reference forecast, which takes all tariff-related announcements that occurred between February 1 and April 4 into account—both the policies instituted by the United States and the countermeasures instated by other countries.
Using those specs, the IMF has lowered its growth forecast to 2.8 percent for 2025 and 3 percent for 2026, “a cumulative downgrade of about 0.8 percentage points” compared to its outlook in January. In 2024, the global economy grew at a rate of 3.3 percent.
But the U.S. is likely to fare even worse, the IMF projects. The reference forecast suggests that the U.S. economy will grow about 1.8 percent in 2025, nearly one full percentage point lower than the IMF’s January forecast. About half of that is directly attributed to tariffs, per the IMF.
“Tariffs account for 0.4 percentage point of that reduction,” Gourinchas’ blog noted.
In 2024, the U.S. economy grew at a rate of 2.8 percent.
The U.S. is far from the only country impacted; the IMF also lowered its growth forecast for China this year, by a more modest 0.6 percentage point reduction, leaving its projected growth rate at 4 percent, down from 5 percent growth in 2024.
In addition to adjusting its economic outlook to meet the reference forecast, the IMF put forth two alternative forecasts, which are predicated on two scenarios: Trump drops much of his planned tariff activity and returns to the pre-April 2 status quo, or Trump sustains his 90-day pause on tariffs for countries other than China indefinitely, but tensions with China continue.
For the first alternative, which excludes Trump’s tariffs and “Liberation Day” measures, the IMF projects that “global growth would have seen only a modest cumulative downgrade of 0.2 percentage point, to 3.2 percent for 2025 and 2026.”
The projected path for the second alternative, which includes Trump’s 90-day pause on tariffs for many nations and the U.S.-China trade war bubbling beneath the surface, comes much closer to the reference forecast; the IMF noted that the pause, even if it keeps up indefinitely, doesn’t provide much relief from the reference forecast.