Trump has shaken the world economy — how tariffs destroy growth

Until recently, the global economy seemed to be on the verge of stabilization. However, it has once again found itself in a zone of turbulence. In its latest report, the World Bank sharply downgraded its global gross domestic product (GDP) growth forecasts, warning of the weakest economic development in decades.

Reuters reports that the main reason for this is international trade conflicts, which have intensified since the introduction of new US tariffs under Donald Trump's administration. According to leading economists, by 2025, the world will experience "the slowest development since the 1960s". This is no longer a hypothesis but a real trend driven by geopolitical shifts, tariff wars, and increased inflation.

"Six months ago, a 'soft landing' for the global economy seemed likely. But that moment has been irrevocably lost," the experts say.

Trade wars: how tariffs destroy growth

International trade, the engine of economic progress for decades, has fallen victim to political decisions. New 10 percent US tariffs on imports from most countries, as well as announced increases postponed until July 2025, have created uncertainty and reduced trade flows.

The World Bank forecasts that global trade growth will reach only 1.8 percent in 2025 — half the rate in 2024 and far below the 5.9 percent rate seen in the 2000s. This slowdown directly impacts economic growth because trade provides access to markets, technology, and capital.

Economists emphasize that "this year, the shocks will reduce global GDP growth by 2.4%, to the weakest rate in 17 years, if global recessions are not taken into account".

Who will suffer the most?

The biggest impact will be on the poorest countries and emerging markets. A World Bank report predicts that by 2027, GDP per capita in the poorest countries will be 6% below pre-pandemic levels. It will take up to two decades for these countries to fully recover.

Forecasts for developed economies are also disappointing:

• The United States — GDP growth in 2025 will be only 1.4%;
• Eurozone and Japan — economic growth will slow to 0.7%;
• emerging markets — the forecast has been lowered to 3.8%.

These figures reflect a global trend: the average global GDP growth by 2027 will be only 2.5%, the lowest rate in any decade since the 1960s.

Inflation and demographic challenges

In addition to trade issues, the global economy is grappling with rising inflation. The World Bank predicts that global inflation will reach 2.9% by 2025, surpassing the pre-pandemic level. This is due to rising tariffs and labor market tensions caused by demographic shifts, particularly the aging population in many countries.

These factors hinder economic growth and put additional pressure on governments to balance economic stimulus and inflation control.

What can be done?

World Bank economists emphasize that the crisis can still be averted if we act quickly and in a coordinated manner. They suggest three key steps:

1. Restore trade relations: reducing tariffs and promoting free trade can revitalize global markets.
2. Fiscal discipline: governments must optimize budget spending to avoid debt crises.
3. Job creation: investing in education and infrastructure will help adapt to demographic changes and increase productivity.

The World Bank stressed that "with decisive action, governments can restore the pace of poverty reduction and ensure higher living standards for the next generation".

Earlier, Trump had expressed serious concern about a potential economic collapse in the United States. He emphasized that this could become a reality if court decisions canceled the tariffs he had imposed on goods from other countries.

We also informed you of the top five countries in terms of GDP. This ranking changes dynamically, reflecting the rapid economic growth of some countries. A higher GDP usually indicates a richer, more financially stable country.