President Trump announced his latest prices during a Rose Garden event at the White House in Washington, DC, on April 2. The International Monetary Fund has reduced its forecasts for the global economy this year, citing the risks of a total trade war.
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The International Monetary Fund warned on Tuesday that the global economy could be hardly affected while President Trump’s radical rates threaten to trigger a total trade war.
The IMF predicted that the global economy would increase by 2.8% this year, against 3.3% in 2024. In January, the multilateral organization predicted that global growth would extend at the same rate as last year.
At the same time, the IMF reduced its American growth forecasts to 1.8% this year, down compared to the 2.8% that it had predicted in January.
But the IMF has also recognized how unpredictable things have become unpredictable for the global economy since Trump unveiled a certain number of prices this year, including on imports of steel and aluminum. Although it has interrupted many of them, the United States has still imposed a 10% rate on all imports. Meanwhile, so far he has slapped an additional 145% rate on China in his second term.
“We are entering a new era because the global economic system that operates in the past 80 years is being reset,” said Pierre-Olivier Gourchas, chief economist of the IMF, during a press conference.
“Beyond the sudden increase in prices, the sharp increase in the uncertainty of policies is a major engine of economic prospects,” he added. “If sustained, the increase in trade tensions and uncertainty will considerably slow global growth.”
The global markets have dropped in the wake of Trump’s last rates earlier this month, while fears increase that foreign investors do not reduce their exposure to the United States and no longer consider the greatest economy in the world, the sure refuge it has been for decades.
One of the largest fears of investors is that the countries targeted by Trump will retaliate, leading to more widespread tensions. Trump temporarily interrupted most of the reciprocal rates he had imposed on countries, with the exception of China, while his administration seeks to negotiate agreements.
So far, China and Canada have retaliated in the United States with their own prices, while the European Union has said it was ready to retaliate but is willing to try negotiations.
Scott Horsley contributed to this report.
