Economic Growth Faces Significant Setbacks Due to Tariff Policies

Tue May 20 2025 15:42:13 GMT+0300 (Eastern European Summer Time)
Economic Growth Faces Significant Setbacks Due to Tariff Policies

The International Monetary Fund warns that global economic growth will slow, impacted heavily by President Trump’s heightened tariffs, especially on China.


The ongoing trade war and recent tariff implementations by the Trump administration are expected to stifle growth in the U.S. and around the globe, raising inflation concerns and causing uncertainty for American businesses.

In a significant economic report released this week, the International Monetary Fund (IMF) has highlighted a concerning trend in global economic performance, attributing much of the slowdown to President Trump’s aggressive tariff policies. The report suggests that the economic health of the U.S. is at risk due to the increased import taxes imposed on major trading partners, contributing to a broader global decline.

The IMF forecasts a decrease in global output growth from 3.3 percent in 2024 to 2.8 percent this year. This decline is largely linked to the tariffs that Mr. Trump has enacted, which include an overarching 10 percent tariff on nearly all imports and a staggering 145 percent tariff on specific Chinese goods entering the U.S. These "reciprocal" tariffs also extend to close allies in the European Union, Japan, South Korea, and Taiwan, however, they have been paused until July in hopes of negotiating favorable trade agreements.

Businesses in the U.S. find themselves navigating through unprecedented uncertainty, particularly those that rely on exports or foreign materials, as the elevated tariffs hinder their competitiveness. Both China and Canada have responded to Trump's tariffs with their own trade restrictions, and the EU has indicated its readiness to increase tariffs further should the U.S. implement additional taxes.

The IMF highlights that the U.S. economy is expected to grow at a mere rate of 1.8 percent in 2025, a stark drop from 2.8 percent the previous year. This is nearly a full point lower than earlier forecasts made in January, when the U.S. economy was seen as one of the strongest in the world. The report indicates that these evolving trade tensions and economic constraints could cast a long shadow over recovery prospects, putting additional pressure on global economic dynamics.

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