Former President Donald Trump has indicated that, upon taking office, he plans to impose a 10% tariff on all global imports. The World Bank has forecasted that this move could have significant negative repercussions for global economic growth.
Using its global macroeconomic model, the World Bank simulated the effects of a 10% tariff imposed by the U.S. on all trading partners. The results showed a projected decrease in global economic growth by 0.2%, while U.S. economic growth could decline by 0.4%. If trading partners retaliate with countermeasures, the overall negative impact could rise to 0.9%.
The World Bank cautioned that if trading partners impose a 10% tariff on U.S. goods in response, it would further diminish an already weak global economic growth rate. The report noted that even if the U.S. extends its tax cut policies, its economic growth next year would only increase by 0.4%, with minimal spillover effects for other countries.
Furthermore, the World Bank's report predicted that global economic growth rates for this year and next would remain at 2.7%, unchanged from 2024. It warned that developing economies are facing their weakest long-term growth prospects since 2000.
Additionally, the Bank for International Settlements (BIS) has also highlighted that friction and fragmentation in global trade are likely to intensify, pointing to a broad trade war between the U.S. and other nations as a tangible risk scenario.
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