The World Bank has warned that US tariffs could reduce the outlook for global growth
By Andrea Shallal
WASHINGTON (Reuters) – A total of 10% tariffs on U.S. goods in 2018 could be imposed if U.S. trading partners retaliate with their own tariffs. The World Bank warned on Thursday that a 2.7% low could cut global economic growth by 0.3% in 2025.
US President-elect Donald Trump, who took office on Monday, has proposed a 10% tariff on international imports, 25% punitive tariffs on imports from Canada and Mexico until they stop drug and immigration imports and 60. % Tariff on Chinese goods. Some countries, including Canada, have already vowed to retaliate.
Simulations using the World Bank’s Global Macroeconomic Model show that US tariffs on all trading partners will increase by 10 percent by 2025, reducing global growth by 0.2 percent for the year, and comparable retaliation by other countries could add to the pressure on growth. .
Those estimates are consistent with foreign studies that show a 10-point increase in U.S. tariffs “could reduce U.S. GDP by 0.4%, but increase the overall negative impact of retaliation by trading partners to 0.9%.”
But if the U.S. tax cuts are extended, U.S. growth could increase by 0.4 percent in 2026, he said.
The Bank for International Settlements also sounded the alarm on Thursday, warning of growing “conflict and fragmentation” in global trade, calling a wide-ranging trade war between Washington and other countries a “real risk situation”.
The World Bank’s latest biannual Global Economic Prospects report It warned of flat global economic growth of 2.7% in 2025 and 2026, the same as in 2024, and emerging economies experiencing their weakest long-term growth outlook since 2000.
According to the Multilateral Development Bank, foreign direct investment in developing economies is about half of what it was in the early 2000s, and global trade restrictions are five times higher than the 2010-2019 average.
Growth in developing countries is expected to reach 4% in 2025 and 2026, much lower than pre-pandemic estimates due to higher credit pressures, weak investment and weak productivity growth, and rising costs of climate change.
Overall output in emerging markets and developing economies is expected to remain above 5% of the pre-pandemic trend in 2026, due to the pandemic and subsequent shocks.
World Bank Chief Economist Endermit Gil said in a statement that “the next 25 years will be a stronger challenge for economic development than the last 25 years.” He urged countries to make domestic reforms to encourage investment and strengthen trade relations.