IMF Revises World Growth Downwards Due to Trump’s Tariffs

The IMF issued an update on its forecast in the light of tariffs that Trump is imposing. As a consequence, the global growth rate is forecasted to slide from 3.6% to 2.8% in 2025. The previous forecast was released at the start of 2025 before Trump’s so-called ‘Liberation Day’ on the 2nd of April 2025.

The forecast model has to take into account various scenarios. Currently, most countries with the exception of China, have had their tariff hike suspended. So things might vary depending if tariffs are maintained, reduced or increased again.

The reference forecast assumes that US tariffs and countermeasures announced between 1st of February and 4th of April 2025 will be maintained.

At the country level, the USA growth will drop from 2.7% to 1.8%. As a corollary, the US inflation rate is expected to rise from 2% to 3%, as a consequence of higher costs of imported goods. As for China, the growth rate will drop from 4.6% to 4%, while inflation will actually go down by 0.8%.

If trade tensions worsen, it could further depress the world economy. On the other hand, if countries managed to promptly negotiate a new trade agreements with Trump, then we have some reason to entertain a little optimism.

At this juncture, it might be opportune t recall that the Articles of Agreement of the IMF sets the mission of the organization. The IMF shall facilitate the expansion and balanced growth of international trade, and to contribute thereby to the promotion and maintenance of high levels of employment and real income.

Indeed, the IMF reminds us that globalization is not an objective in and of itself. It is a a means to an end, which is to contribute to better living standards for all nations around the world.