Tariffs Trigger Sharp U.S. Growth Downgrade as Global Outlook Darkens
The global economy is facing fresh turbulence, and the United States is at the center of it.
The International Monetary Fund has sharply revised its growth outlook for the U.S., cutting its forecast to 1.8% for 2025—down from 2.7% earlier this year—citing rising tariffs and mounting policy uncertainty. It’s the steepest downgrade among advanced nations.
Tariff tensions have escalated into a full-blown trade conflict, with the U.S. imposing steep levies on Chinese imports—up to 145%—and China retaliating with duties of 125%. Washington has also rolled out a 10% blanket tariff for most global imports, further unsettling financial markets and freezing business confidence.
According to IMF Chief Economist Pierre-Olivier Gourinchas, this wave of protectionism is dampening investment and slowing down trade flows, dragging global growth expectations down to 2.8%—a noticeable drop from the 3.3% predicted earlier. The Fund now sees a 40% chance of a U.S. recession, a substantial increase from last year’s 25%.
The UK hasn’t been spared. Its growth projection has been lowered to 1.1%, though it still leads among European G7 nations. Inflation, however, is forecast to hit 3.1%—the highest in the developed world—thanks to rising utility and energy costs. Chancellor Rachel Reeves welcomed the UK’s relative strength but acknowledged that the global economy is entering choppy waters.
Meanwhile, other countries are also adjusting expectations. China’s growth forecast is down to 4%, and Mexico, once expected to expand, is now likely to contract by 0.3%. Only Spain saw its 2025 outlook upgraded, thanks to rebuilding efforts after major floods.
While the IMF notes that these forecasts are based on current trends, it warns the picture could change quickly depending on how trade policy evolves. For now, the message is clear: uncertainty is back, and it’s weighing heavily on the world’s economic engine.
Alexander Stefanov
Reporter at Coindoo
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over 8 years of experience covering the crypto, blockchain and fintech industries, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics.
