The International Monetary Fund (IMF) has lowered its growth forecast for the U.S. economy in 2025, citing the potential impact of an escalating trade war. The IMF’s latest assessment suggests that increased trade tensions, particularly those involving tariffs, could significantly dampen economic activity in the United States.
The revised forecast reflects concerns that higher tariffs will raise import prices, reduce consumer spending, and negatively affect business investment. The IMF also worries about the potential for retaliatory measures from other countries, which could further disrupt global supply chains and hinder economic growth.
Specifically, the IMF projects that a full-blown trade war would lead to decreased exports, increased domestic prices, and reduced overall economic output. The organization emphasizes the importance of resolving trade disputes through negotiation and cooperation to avoid adverse consequences for the global economy. They advise the U.S. government to carefully consider the impact of trade policies on both domestic and international economies. The IMF suggests that a more multilateral approach to trade negotiations could help mitigate risks and promote sustainable growth. This involves working with international partners to address trade imbalances and promote fair trade practices. They also highlighted that the trade war may contribute to rising inflation, potentially pushing the Federal Reserve to maintain higher interest rates, thus slowing down economic activity.
