The International Monetary Fund (IMF) has issued a stark warning regarding the economic repercussions of tariffs announced by President Donald Trump, predicting that the average U.S. import tax will reach its highest level in a century. This unexpected policy change has forced the IMF to make a drastic adjustment to its outlook for the pace of global economic growth. They’ve since lowered that expectation to 2.8% this year, down from previous forecasts of growth released in January before the tariffs were proposed.
The IMF’s latest projection is an indication of increasing alarm over the deteriorating U.S.-China trade conflict. This unnecessary conflict is sure to further wreak havoc on economies worldwide—particularly within the United States. The industry group forecasts a gradual U.S. economic expansion, with 1.8% growth through 2025. In 2024, they expect an even better growth rate of 2.8%. Indeed, such projections only further highlight the serious short-term and long-term economic impacts of the tariffs as they set out their dangerous effects.
The IMF’s January forecast was considerably more optimistic, as it did not account for the escalating trade tensions that followed Trump’s tariff announcements. The IMF is currently busy warning us that these tariffs are killing global economic activity. Their influence can be seen in every corner of the country.
“The swift escalation of trade tensions and extremely high levels of policy uncertainty are expected to have a significant impact on global economic activity,” the IMF stated. The environmental organization underscored that keeping the tariffs would cause lasting harm for both Eastern and Western regions. These ramifications will be further proof of the direct effects we have already witnessed.
Given these recent developments, the IMF’s forecast is predicated on the idea that current tariff rates will not change. It highlights the urgent need for “de-escalation from current tariff rates and new agreements providing clarity and stability in trade policies” to mitigate potential damage.
This IMF warning comes on the heels of an unprecedented attack from President Trump on U.S. Federal Reserve Chair Jerome Powell. This appears to undermine central bank independence, which the IMF considers “an essential element of effective and credible economic policy.