World Bank forecasts U.S. growth halving due to tariffs; global economy also faces significant slowdown, especially in exports.
In Short:
The World Bank has downgraded U.S. growth projections to 1.4% for 2025 due to President Trump’s tariff policies, warning that increased tariffs could worsen the global economic slowdown. The report highlights a decline in growth for multiple economies, with a particular emphasis on the negative impact on living standards and the need for negotiated trade barriers.
The World Bank has downgraded its growth projections for the U.S. economy, forecasting an increase of just 1.4% in 2025, down from the previous year’s 2.8%. This reduction is attributed to President Trump’s tariff policies, which are anticipated to hamper both U.S. and global growth.
The World Bank’s latest report highlights an expected slowdown in multiple economies, including the eurozone, Japan, and India. Mexico is projected to experience the most significant impact, with growth dropping to 0.2% from 1.5%.
Exacerbate the slowdown
Amid these forecasts, the World Bank warned that a further rise in tariffs could exacerbate the slowdown. If tariffs were raised by an additional 10 percentage points, global growth could plummet to 1.8% this year and 2% in 2026. Such an escalation would lead to reduced trade, declining confidence, and increased market turmoil.
Indermit Gill, the World Bank’s chief economist, noted that if a course correction is not made, the negative effects on living standards could be severe. The Organisation for Economic Cooperation and Development has also voiced concerns about the implications of tariffs, predicting a U.S. growth rate of 1.6% with inflation approaching 4%.
