A considerable reduction in the anticipated global production this year has led to a call for the readjustment of trade policies to sustain living conditions. The tariffs implemented by President Trump have greatly agitated the financial markets and have caused a worldwide disruption to trade. According to a recent report released by the World Bank, President Trump’s trade policies are projected to cause a significant deceleration in global economy this year as the policies impose obstacles to international trade and heighten economic uncertainty.
Though the general outlook may be deteriorating, the World Bank suggests the global economy is not anticipated to slump into a recession. However, the trade discord is fostering a climate which could lead to the most sluggish growth period since the 1960s. The economic advancement in several of the most impoverished parts of the globe has found itself at a standstill.
In its Global Economic Prospects report, the World Bank predicted a slowdown in global output expansion from 2.8% last year to 2.3% in 2025. This figure shows a decline from the 2.7% growth that was predicted at the beginning of the year. ‘The world economy is facing turbulence yet again,’ Indermit Gill, World Bank’s chief economist, stated in the report.
‘The harm to living standards could be profound barring an immediate reversal in the current course,’ Gill further added. This year, the United States imposed a flat 10% tariff on imports in addition to a staggering 50% tariff on imported steel and aluminum. This innovative approach has also witnessed reciprocal tariffs threatened on a host of trade partners.
Furthermore, US tariffs on Chinese imports spiked to a sharp 145% before being reduced to allow room for negotiations on trade. These tariff changes have resulted in the average efficient US tariff rate skyrocketing to the highest it has been in a century. In the midst of these changes, the World Bank publicized its latest forecasts.
The release of these forecasts coincided with the second day of trade discussions taking place in London between officials from the United States and China. In the recent past, these two economic powerhouses have implemented export regulations that restrict each other from accessing an extensive range of goods crucial to the advancement in high-technology and military applications.