President Donald Trump’s trade war will badly dent the global economy and has raised the risk of a financial crisis, the International Monetary Fund warned Tuesday.
On the eve of its spring meeting, the IMF slashed its global growth forecast for 2025 to 2.8 percent from 3.3 percent at its last quarterly update in January. The trade war will also remain a drag on growth next year, it said while cutting its growth forecast to 3 percent from 3.3 percent.
“The global economic system under which most countries have operated for the last 80 years is being reset, ushering the world into a new era,” chief economist Pierre-Olivier Gourinchas wrote in a blog accompanying two new IMF reports Tuesday. “Existing rules are challenged while new ones are yet to emerge.”
The IMF gave fresh ammunition to critics of Washington’s trade policy, who allege the U.S. will be the biggest loser in any trade war. It cut its forecast for the U.S. economy by nearly a full percentage point to 1.8 percent, from 2.7 percent in January. That’s a bigger hit than either China or Canada (both 0.6 percent) or the eurozone (0.2 percent) will suffer, according to the fund’s economists. At the same time, it also raised its inflation forecast for the U.S. this year by a full percentage point to 3 percent.
