Tariff dramas trim growth prospects, mostly in North America
We’ve lowered our US GDP growth forecast for 2025 by 0.4ppts to 2.0% and made much steeper adjustments to Canada and Mexico, reflecting our assumption of more aggressive US tariff hikes. The spillovers to the rest of the world are limited, and in the case of Europe offset by a defence-related fiscal boost.
While the global economy is still a long way from recession territory, our updated forecast points to this year being the weakest for world GDP growth since the global financial crisis, excluding 2020.
In this report, we share our thoughts on five questions related to assessing where the risks around the path for tariffs lie:
- To what extent do the latest tariff hikes make Trump’s underlying motives clearer?
- How much pain is Trump prepared to inflict on the US economy?
- How much will Canada and Mexico fight?
- What do the latest tariff hikes signify for the rest of the world?
- What tariffs on the rest of the world will the US announce in April?
Tags:
Related Reports
Stopgap Spring Statement leaves problems unresolved
The Spring Statement delivered on Wednesday 26 March is likely to prove a stopgap ahead of a more comprehensive overhaul of UK fiscal policy in this autumn's Budget.
Find Out More
Europe’s defence splurge will help industry – but by how much?
Our baseline forecast now assumes that European defence spending will rise to 3% of GDP by the end of the decade. This could give a growth boost to Europe's ailing industrial sector.
Find Out More
Why official UK data are less reliable and what this means
A series of problems have undermined confidence in the accuracy of official economic statistics for the UK. When using Office for National Statistics data, it's important that users make allowance for the increased uncertainty about their reliability.
Find Out More
Ukraine-Russia ceasefire changes risk profile for commodities
We assess the implications and risks for our commodity price forecasts against the backdrop of a 'fragile' ceasefire in the Russia-Ukraine conflict.
Find Out More