The International Monetary Fund expects slower growth and higher inflation in the U.S. as a result of President Trump’s trade policies.According to The New York Times, the trade war initiated by President Trump is expected to have a negative impact on global economic growth this year. This is largely due to the aggressive use of tariffs by the United States, the world’s largest economy.
The International Monetary Fund (IMF) released economic projections on Tuesday, following Mr. Trump’s decision to raise tariffs to levels not seen since the Great Depression. The president has imposed a 10 percent tariff on almost all imports, as well as high levies on Chinese goods. He has also implemented “reciprocal” tariffs on major trading partners such as the European Union, Japan, South Korea, and Taiwan. However, these have been put on hold until July as the administration works towards securing bilateral trade deals.
This approach has created uncertainty for American companies that export products or rely on foreign inputs, leading to a decrease in output at a time when global economies were stabilizing after years of inflation. China and Canada have already retaliated with their own trade barriers, and the European Union has threatened to increase levies if the US goes ahead with its planned 20 percent tax.
The IMF’s World Economic Outlook report predicts a slowdown in global output to 2.8 percent this year, compared to 3.3 percent in 2024. This is a downgrade from the previous forecast in January, which projected steady growth in 2025. The IMF also expects slower output next year compared to their previous prediction.
The main reason for this downgrade is the impact of tariffs on the US economy, which was already expected to lose momentum this year. The IMF forecasts a slowdown in US output to 1.8 percent in 2025, down from 2.8 percent last year. This is almost a full percentage point lower than the 2.7 percent growth projected in January, when the US was the strongest economy in the world.
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