The International Monetary Fund (IMF) has warned that the global economy is slowing down sharply due to escalating U.S. tariffs under President Donald Trump’s trade policies, with top U.S. trading partners China, Mexico, and Canada bearing the brunt.

Speaking during the IMF/World Bank Spring Meetings held on April 22, 2025, in Washington, D.C., IMF Chief Economist Pierre-Olivier Gourinchas said the world is entering “a new era” of global trade disruption. The IMF slashed its global growth forecast to 2.8% for 2025, down 0.5 percentage points from January’s projection. Growth for 2026 is now pegged at 3.0%, a 0.3-point drop from earlier estimates.

“Persistent trade tensions and uncertainty will continue to weigh heavily on the global economy,” Gourinchas warned, noting that the IMF’s outlook for global trade growth has been more than halved for this year.

The Fund’s analysis stopped short of including the most recent U.S. tariff hikes, including new levies pushing duties on Chinese imports to 145%, as they were announced after the April 4 cutoff. However, it cautioned that including these would further worsen global economic prospects.

Major Economies Facing Slowdown

The United States, the world’s largest economy, saw its 2025 growth forecast cut to 1.8%, down 0.9 percentage points from January. A further slowdown to 1.7% in 2026 is projected, with the IMF citing policy uncertainty and declining consumer demand.

U.S. inflation is expected to hit 3.0% this year, with a slight easing to 2.5% in 2026. Globally, consumer prices are forecast to climb 4.3% in 2025 and 3.6% in 2026, due to rising trade costs.

China, Mexico, and Canada Among Worst Hit

The IMF expects China’s economic growth to plunge to 4.0% in 2025, down from 5.0% in 2024, despite increased government stimulus. Mexico’s economy is now projected to contract by 0.3%, a sharp 1.7-point drop from earlier forecasts. Canada also faces a steep downward revision in its growth outlook.

Japan, the world’s third-largest economy, is expected to grow by just 0.6% this year and next, reflecting its own struggles amid a shifting global trade order.

Europe’s Economic Outlook Weakens Further

Most European economies have had their 2025 growth outlooks revised downward, with the eurozone forecast cut to 0.8%. Germany is expected to record zero growth, while France, Italy, and the UK also face slower economic activity.

However, Spain emerged as a bright spot, with the IMF upgrading its forecast to 2.5% growth in 2025, citing strong momentum from 2024.

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Africa and the Middle East

In sub-Saharan Africa, growth is projected to slightly dip to 3.8% in 2025, before recovering in 2026. The Middle East faces economic headwinds but is expected to improve as oil disruptions ease and regional conflicts diminish.

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