Trump’s tariffs brake the global economy

In view of the aggressive customs policy of US President Donald Trump, the international monetary fund expects global growth and also reduces the forecast for Germany. The fund, based in Washington, is based on the Federal Republic of zero growth this year, as can be seen from the data of the new economic forecast. That is 0.3 percentage points less than in January.

The IMF has also reduced its prediction for the global economy. It should grow significantly slower at 2.8 percent than forecast in January (minus 0.5 percentage points). The global economy is put to a « hard trial », writes IMF chief host Pierre-Olivier Gourinchas with a view to the trade disputes. It is a « new era », the global economic system will be adjusted.

Economic growth in the euro area is expected to drop 0.2 percentage points to 0.8 percent compared to the January forecast. The IMF mainly mentions uncertainty and tariffs. In 2026, growth in the euro area is said to be 1.2 percent (minus 0.2 percentage points). Accordingly, Germany with a view to the relaxation of the debt brake provides defense for the upswing through real wage growth and more financial policy scope in Europe’s largest economy.

A forecast in an extraordinary situation

The IMF emphasizes that the global economic forecast was created under « special circumstances ». The background is the violent customs package that Trump announced on April 2 and provides for both universal and now temporarily exposed mutual tariffs. The forecasts almost concluded at this point should have been thrown overboard, according to the fund. « Although many of the planned customs increases have been put on hold for the time being, the combination of measures and countermeasures has driven customs duties in the United States and worldwide to a century high. »

The global economy has proven to be astonishingly resistant during the severe shocks of the past four years and is still carrying considerable scars of it. Now there is a risk that the trade voltages will increase from retaliatory measures, and inflation could also be heated again.

The IMF has significantly corrected the forecast for the largest economy in the world USA. This year, GDP is expected to grow by 1.8 percent (minus 0.9 percentage points), in the coming up by 1.7 (minus 0.4 percentage points). The IMF also sees correction needs down in the second largest economy China. China’s economy should grow by four percent in this and next year (minus 0.6 percentage points/minus 0.5 percentage points). In addition to the weakness of the real estate sector, China’s economy is heavily burdened by the trade dispute with the USA, according to the IMF.

That worries the IMF

The IMF looks at trade policy with great concern. A tightening of the trade conflict would have a negative impact on the growth of the global economy, although individual countries would be affected differently. « Those to which the new tariffs aim directly would be affected, especially China and the United States, but also a large number of countries in Asia and Europe in the medium term, » said the IMF.

Unlike in the last century, the global economy is now economically and financially intertwined. A dissolution of these supply chains and financial flows can result in great economic faults. The reduction in competition also means that there is fewer incentives for innovation. In general, due to the tariffs, the fund calculates with a decline in overall productivity, which in turn leads to higher production costs and prices.

The fund also corrected its prediction for the inflation rate. In the industrialized nations, it is expected to be 2.5 percent (plus 0.4 percentage points) in 2025 and 2.2 percent (plus 0.2 percentage points) next year.