The International Monetary Fund (IMF) has issued a stark warning that global trade volume and economic growth will be significantly reduced if the US continues with its current tariff policies. In its latest World Economic Outlook forecast, the IMF has revised its 2025 trade growth forecast downwards by half, from 3.2 percent to 1.7 percent, compared to its January update. The economic growth forecast has also been adjusted from 3.3 percent in 2024 to 2.8 percent in 2025, indicating a global slowdown but not a recession. The IMF predicts that the US, central to the tariff negotiations, will be the most affected OECD country, with its 2025 growth reduced by half from 1.8 percent to 0.9 percent.
The IMF's forecast is based on the assumption that the Trump administration will proceed with its current tariff plans, including the "reciprocal" tariff list that impacts most foreign trade partners. However, this prediction is uncertain as the White House has previously changed its position on the final bundle of tariffs after talks. On April 16, 2025, Treasury Secretary Scott Bessent indicated in a private meeting with JP Morgan investors that the growing trade war with China is "unsustainable." Despite the US imposing a 145 percent top tariff rate on Chinese goods and China retaliating with a 125 percent tariff, Bessent predicted that tariff tensions would de-escalate in the "very near future," even though formal talks with Beijing have not yet started. Following his comments, public markets soared, and the Dow recovered the previous day's losses.
White House press secretary Karoline Leavitt reported on April 16, 2025, that the administration is reviewing 18 trade proposals and will hold trade meetings with 34 other countries that week. However, there have been no formal talks between President Donald Trump and Chinese President Xi Jinping regarding tariffs. Trump stated on April 16, 2025, that the US will be "very nice" with China and expects the same in return, but emphasized that China must make a deal as they will not be able to trade in the US otherwise. Despite his past complaints about Chinese industrial policies "ripping off" America, Trump suggested he will not "play hardball" with China. Additionally, China has warned against any party reaching a deal with the White House at its expense, stating that such actions would ultimately fail and harm all parties involved.