Trump tariffs will throttle US, global economies: IMF

Century-high tariff levels imposed by President Trump. are expected to take a bite out of global economic growth this year, International Monetary Fund (IMF) economists said Tuesday.

The IMF downgraded its projection for global gross domestic product (GDP) growth to 2.8 percent growth in 2025, down from a forecast of 3.3 percent in January.

U.S. growth projections were marked down to 1.8-percent growth from 2.7-percent growth, and expectations for the output of advanced economies were pulled down to 1.4 percent from 1.9 percent.

The markdown reflects “tariff rates to levels not seen in a century and a highly unpredictable environment,” IMF economists said.

Following the announcement of Trump’s “Liberation Day” tariffs on April 2, additional China-specific tariffs on April 9, and various other trade taxes that have gone into effect since January, the U.S. effective tariff rate is now at about 25 percent.

The IMF said that global economic conditions had nearly normalized following the pandemic disruptions starting in 2020 that led to a wave of global inflation and political unrest, but that trade policies were ushering in a new era of uncertainty.

“Major policy shifts are resetting the global trade system and giving rise to uncertainty that is once again testing the resilience of the global economy,” IMF economists said.

Other economic organizations have made similar observations in recent weeks, including the Federal Reserve, which has made predictions of slower growth and faster price increases as a result of U.S. tariff policies.

In its latest summary of economic projections, the Fed downgraded the 2025 U.S. growth outlook to 1.7 percent from 2.1 percent. It raised its inflation expectation to 2.7 percent from 2.5 percent, while raising the unemployment forecast to 4.4 percent from 4.3 percent.

“The level of the tariff increases announced so far is significantly larger than anticipated. The same is likely to be true of the economic effects, which will include higher inflation and slower growth,” Fed Chair Jerome Powell said last week.

Economists for the United Nations have also noted the hit to growth, observing that increased protectionism reflects public dissatisfaction with globalization.

“Trade tensions, home-shoring, and supply chain securitization reflect economic power competition and public discontent with globalization,” the wrote in a trade a development report earlier this year.

While “losses to global GDP from economic fragmentation are substantial,” they said, “[it’s]  important not to overstress the extent of deglobalization.”