Trump’s Tariff Policies Weigh on Global Economic Growth
Bucharest — May 15, 2024 —
Global growth will remain subdued in 2025, driven by the ongoing impact of former President trump’s policies, namely tariffs. The Foreign Economic Policy institute (KIEP) forecasts a global growth rate of 2.7%, the lowest this century, excluding crises. This forecast reflects increased uncertainty in the global trade order and the repercussions felt by economies worldwide. Further analysis expects these effects to continue.
Trump’s Tariff Policies Continue to Weigh on Global Economic Growth in 2025
Global economic growth is projected to remain subdued this year, largely due to the lingering effects of former President Donald trump’s tariff policies. The Foreign Economic Policy Institute (KIEP) released its ‘2025 World Economic Outlook’ on May 13,forecasting a global growth rate of 2.7% for the year. This figure represents a 0.3 percentage point decrease from their November forecast and marks the lowest growth rate in the 21st century, excluding periods of significant global crisis.
Key Factors Contributing to the Economic Slowdown
- Trump’s Tariff Policies: Increased uncertainty in the global trade order due to tariffs imposed during the Trump management.
- Trade Wars: Intensifying trade disputes between major economic powers.
- Inflation and Monetary Policy Uncertainty: Fluctuations in inflation rates and unpredictable monetary policy decisions.
- Financial Anxiety and Debt Crisis: Concerns over asset values and potential debt crises.
Did You Know?
Tariffs are taxes imposed on imported goods or services. They are often used to protect domestic industries but can also lead to higher prices for consumers and retaliatory measures from other countries.
The United States: A Major Victim
The United States is feeling the brunt of these policies. KIEP forecasts a U.S. economic growth rate of just 1.3% this year, a significant 0.8 percentage point drop from the previous forecast. This is a sharp decline from last year’s growth rate of 2.8%.
The U.S. will be substantially lower due to the weakening of psychological and tightening financial conditions due to the uncertainty of foreign policy.
Yoon Sang-ha, head of KIEP International Resident Finance Division
Impact on china
China, engaged in ongoing trade tensions with the U.S., is also expected to experience slower growth. KIEP projects China’s economic growth rate to reach 4.1% this year, influenced by both the trade conflict and substantial economic stimulus measures.
As there is still uncertainty, it is not yet enough to change the growth rate for growth.
Yoon Sang-ha, Head of KIEP International Resident finance Division, on the U.S.-China trade situation
Pro Tip
Diversifying your investment portfolio can help mitigate risks associated with economic uncertainty. Consider investing in a mix of assets, including stocks, bonds, and real estate, to reduce your exposure to any single market or sector.
Lingering Effects expected
The slowdown in global economic growth is anticipated to persist. KIEP forecasts a global economic growth rate of only 2.9% for next year. this is below the 2015-2019 average growth rate of 3.4%.
even if all the issues related to mutual tariffs are resolved in the quarter, it is difficult to return to the previous level until at least next year.
Yoon Sang-ha,Head of KIEP International Resident finance Division
