The World Bank has forecasted a sharply downgraded projection for global output this year, citing President Trump’s trade policy as the primary cause of disruption in international commerce. The organization is urging a “course correction” on trade to help preserve living standards.
According to the report, the global economy is projected to slow sharply, with expansion expected to reach only 2.3 percent in 2025, down from 2.8 percent last year. This is the lowest growth rate since the 1960s.
The US has enacted tariffs on a wide range of imports and exports, pushing the average effective US tariff rate to its highest level in a century. The World Bank estimates that reducing global tariff rates by half could boost global growth by 0.2 percentage points over the next two years.
Developing countries are particularly vulnerable to these trade policies, with some having the highest tariffs in the world. The World Bank is advocating for lower trade barriers to stimulate economic growth in these regions.
The country facing the biggest downgrade from the World Bank’s projections is the US, which is expected to slow its output to 1.4 percent this year, down nearly a full percentage point from previous estimates.
“The rise in trade barriers, heightened uncertainty and the spike in financial market volatility are set to weigh on private consumption, international trade and investment,” the report said.
The World Bank has also predicted that China’s growth will slow to 4.5 percent from 5 percent in 2024, with its export growth expected to slacken due to US tariffs. However, government fiscal support is expected to help prop up Chinese consumption and investment activity.
As trade tensions continue to escalate between the US and China, the World Bank is urging a swift course correction on trade policies to mitigate the damage to living standards.
Source: https://www.nytimes.com/2025/06/10/business/trump-trade-war-global-economy.html