The International Monetary Fund is warning of slower global growth due to President Donald Trump’s tariff regime.
“The global economic system under which most countries have operated for the last 80 years is being reset, IMF chief economist Pierre-Olivier Gourinchas wrote in a blog post Tuesday morning.
And the reset isn’t good for the United States’ — or anyone else’s — economy.
Gourinchas cites the U.S. tariffs, the highest in 100 years, as being a major downward driver, along with the whipsawing uncertainty of on-again, off-again plans. But if the tariffs are implemented for the long-haul, growth will slow, Gourinchas says.
“If sustained, this abrupt increase in tariffs and attendant uncertainty will significantly slow global growth,” he writes.
The U.S. economy, specifically, will be hit hard. The IMF has lowered U.S. growth estimates for 2025 to 1.8%. That’s 0.9 percentage points lower than January, and tariffs account for 0.4 percentage points of that reduction. The IMF also raised the U.S. inflation forecast by about 1 percentage point, up from 2%.
While the IMF is not currently predicting a recession in the U.S., Gourinchas told reporters Tuesday that the IMF now views recession odds at 40%, up from 25% in October 2024.
China’s economy is also expected to get smacked by the tariff plans. The IMF has lowered its China growth forecast for this year to 4%, a 0.6 percentage-point reduction, and inflation is revised down by about 0.8 percentage points.
Still, the report isn’t all gloom, as the IMF’s chief economist offers a way out.
“Growth prospects could, however, immediately improve if countries ease their current trade policy stance and forge new trade agreements,” Gourinchas wrote.
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