IMF forecasts slower growth for U.S. economy in 2025, citing trade war

The International Monetary Fund projects sluggish growth for the U.S. economy this year due to an escalating trade war, reinforcing economists' warnings about the negative repercussions of President Trump's tariffs.

"We are entering a new era," Pierre-Olivier Gourinchas, chief economist at the IMF, said. "This global economic system that has operated for the last eighty years is being reset."

The U.S. economy will grow 1.8% this year, the IMF said in its World Economic Outlook, down 0.9% from January and a full percentage point from last year's projection of 2.8%. Growth for 2026 is expected to be slightly lower at 1.7%. The international financial institution does not expect the U.S. to dip into a recession, but said the odds now have risen from 25% to 37%.

The IMF also slashed the growth forecast for the global economy to 2.8% this year, down from 3.3% in January.

The organization does not expect the U.S. to enter a recession in 2025, but said the odds have now risen from 25% as of October 2024 to 37%. The likelihood of a global recession this year has also ticked up to 30% from 17% in October, the IMF said in its report.

Uncertainty over Mr. Trump's trade policy is what's driving the IMF's projection of a U.S. economic slowdown. The international financial agency said trade was stable in 2024 and was expected to remain that way, but that the landscape changed in light of America's tariff war with trade partners.

"This on its own is a major negative shock to growth," an executive summary of the monetary fund's report said.

The IMF's forecasts were finalized April 4, just after the Trump administration announced sweeping tariffs. The international agency warned that further escalating the trade war could stymie both near- and long-term growth.

The Associated Press contributed to this report.