The International Monetary Fund has lowered its forecast for U.S. economic growth in 2025 to 1.8%, down from a previous estimate of 2.7%, citing sharply increased tariffs that now exceed levels reached during the Great Depression. The downgrade signals significant economic headwinds driven by new import duties announced since January, according to the IMF.
Global growth is now forecast at 2.8% this year, down from 3.3%, while the outlook for 2026 has been trimmed to 3% from 3.3%. The U.S. economy is projected to slow further to 1.7% in 2026, compared to a previously forecast 2.1%. Mexico is expected to record the largest revision among major economies, with its 2025 forecast cut to a 0.3% contraction from an earlier projection of 1.4% growth. These figures come from the IMF’s quarterly global economic outlook.
The IMF also revised growth forecasts for China, reducing its projections to 4% for both 2025 and 2026, down from 4.6% and 4.5% respectively. For the eurozone, growth in 2025 is now expected at 0.8%, a decline from the prior 1% estimate.
The new tariffs, implemented by the U.S. and followed by retaliatory measures from other countries, are likely to reduce global economic momentum further, especially if additional barriers are imposed. The IMF warned that continued protectionism could harm productivity as protected industries face reduced competition.
While the Trump administration argues that tariffs will revive domestic manufacturing, the IMF highlighted that technological change and automation, not globalization, are the primary drivers behind the decline in factory jobs.
The fund also raised its inflation outlook globally, noting that U.S. inflation could be 1 percentage point higher than previously expected this year. It cautioned against political interference in monetary policy, emphasizing the importance of central bank independence.
Beyond 2026, the IMF expects long-term negative effects on the U.S. economy, including reduced innovation and efficiency. It also noted potential disruptions to the international monetary system, with risks to the U.S. dollar’s central role in global finance if financial instability worsens.
