In brief
The International Monetary Fund has sounded the alarm over the potential slowdown in global growth due to the escalating trade war led by President Trump, citing uncertainty stemming from new tariffs imposed on major trading partners and the impacts of retaliatory measures.
In a fresh report released on April 22, 2025, the International Monetary Fund (IMF) has warned that the ongoing trade war under President Trump is poised to decelerate the global economy significantly this year. This results primarily from Trump's controversial tariff strategy that is predicted to affect the U.S. economy, already emerging as the world's largest economy.The recent decision by President Trump to impose steep tariffs has led to a grim economic outlook. A 10 percent tariff on most imports, alongside punitive measures, especially a staggering 145 percent tariff imposed specifically on Chinese goods, has been implemented. Furthermore, "reciprocal" tariffs affecting key trading partners such as the European Union, Japan, South Korea, and Taiwan have raised tensions, although these have been temporarily put on hold until July as the administration seeks to negotiate bilateral trade agreements.The impact of these tariffs has created an air of uncertainty, particularly for U.S. companies that depend heavily on exports or foreign materials for production. This has resulted in a downturn at a time when a recovery was anticipated post-inflation struggles. Countries like China and Canada have retaliated against U.S. tariffs by imposing their own trade restrictions, while the European Union has threatened to escalate tariffs further should the U.S. continue with plans to increase taxes on imports.The IMF's World Economic Outlook indicates a 2.8 percent slowdown in global output from the 3.3 percent growth experienced last year. The U.S. itself is projected to see economic growth decline to 1.8 percent in 2025, significantly down from last year’s growth of 2.8 percent, and nearly a full percentage point lower than foreseen forecasts from earlier in January.The repercussions of Trump's trade war thus not only threaten the U.S. economy but also cast a long shadow over the international economic landscape, feeding into fears of a more extended period of uncertainty and economic stagnation as businesses grapple with unprecedented tariff levels and retaliatory trade barriers.
