Key Facts
Economists predict that the trade war initiated by former U.S. President Donald Trump will significantly impact economic growth in 2025 and 2026. According to a Bloomberg survey conducted between April 18 and 23, involving 82 economists, the U.S. economy is expected to grow by 1.4% in 2025 and 1.5% in 2026. These figures represent a downward revision from earlier forecasts of 2% and 1.9%, respectively. The probability of a recession within the next 12 months has risen to a median of 45%, up from 30% in March.
The imposition of tariffs, including a 145% tariff on Chinese imports and a minimum 10% tariff on goods from other countries, has led to rising prices and reduced consumer spending. Personal consumption, which accounts for approximately two-thirds of the U.S. GDP, has been significantly downgraded, contributing to warnings of an economic slowdown. Some experts even anticipate a recession by the end of the year.
Brett Ryan, Senior U.S. Economist at Deutsche Bank Securities, emphasized the need for a swift resolution to the trade war and a restoration of confidence in U.S. policymaking to achieve stronger economic growth. While the Trump administration has temporarily suspended some tariffs for 90 days, Bloomberg Economics reports that the effective tariff rate remains at a century-high level of 23%, undermining consumer and business confidence.
The International Monetary Fund (IMF) has also revised its global economic growth outlook for 2025 and 2026, citing the trade war as a key factor. The IMF warns that the situation could worsen if the trade conflict escalates further.
Additionally, the survey revealed that U.S. imports surged at an annualized rate of 19.2% in the first quarter of 2025, as companies rushed to secure foreign goods before tariff increases. Inflation is also expected to rise, with the Personal Consumption Expenditures (PCE) price index projected to reach 3.2% by the end of 2025, up from a previous forecast of 2.7%. Core PCE, excluding food and energy, is anticipated to hit 3.3%.
The labor market is expected to remain relatively stable, with monthly job growth averaging 72,000 in 2025 and 100,000 in 2026. However, the unemployment rate is forecasted to rise to 4.6% by the end of 2025, up from an earlier estimate of 4.3%.
Summary
The trade war initiated by former U.S. President Donald Trump is projected to hinder economic growth in 2025 and 2026, according to a Bloomberg survey conducted from April 18 to 23 with 82 economists. U.S. GDP growth forecasts have been revised downward to 1.4% for 2025 and 1.5% for 2026, compared to earlier estimates of 2% and 1.9%. The likelihood of a recession within the next 12 months has risen to 45%, up from 30% in March.
Tariffs, including a 145% levy on Chinese imports and a minimum 10% on goods from other nations, have driven up prices and curtailed consumer spending, which constitutes about two-thirds of U.S. GDP. Inflation is expected to rise, with the Personal Consumption Expenditures (PCE) price index projected to reach 3.2% by the end of 2025, while core PCE is forecasted at 3.3%.
The labor market is expected to remain stable, with monthly job growth averaging 72,000 in 2025 and 100,000 in 2026. However, unemployment is anticipated to rise to 4.6% by the end of 2025. Economists emphasize the need for resolving the trade war to restore confidence and support stronger growth.
