The International Monetary Fund (IMF) has lowered its 2025 economic growth forecast for the United States, citing uncertainty in trade policy and increased tariffs.

The US economy is now projected to grow by 1.8%, a decrease from the previous estimate of 2.7% made in January.

The IMF noted that higher tariffs and ongoing policy uncertainty have contributed to a slowdown in global growth.

It now forecasts the global economy to expand by 2.8% this year, down from its earlier projection of 3.3%.

The IMF said that the likelihood of a US recession in 2025 has risen to 40%, up from 25% last October.

Other advanced economies are also facing growth downgrades.

🔗 Source: BBC

🧠 Food for thought

1️⃣ Historical data shows tariffs consistently reduce economic output despite promised benefits

The IMF’s sharp downgrade of US growth reflects a well-established economic pattern rather than a speculative forecast.

Analysis of data from 151 countries demonstrates that higher tariffs consistently reduce output and productivity while increasing unemployment and worsening inequality, contradicting claims about their economic benefits 1.

The current average effective US tariff rate of 22.5% represents the highest level since 1909, creating a rare real-world experiment in modern protectionism 2.

When the US implemented tariffs in 2018-2019, they failed to boost manufacturing employment as promised, instead harming the sector through rising input costs for businesses that rely on imported materials 1.

The Congressional Budget Office previously projected that higher trade barriers would reduce real US GDP by approximately 0.3% based on much smaller tariffs than those currently being implemented 3.

2️⃣ Tariffs have regressive impacts, placing greater burden on lower-income households

While tariffs are often politically framed as protecting American workers, the economic evidence shows they disproportionately harm those with lower incomes.

Recent International Monetary Fund developments