Increasing Tariff Conflicts Raise Fears of Global Economic Slowdown

(MENAFN) Growing apprehension about a worldwide economic downturn has been fueled by United States Leader Donald Trump’s tariffs since his inauguration and mounting unpredictability in international trade strategies.

These developments have prompted major global institutions to revise their predictions for worldwide economic expansion this year.

Forecasts for economic advancement have seen a notable decline as China retaliates against Trump’s tariffs by imposing countermeasures.

This response follows Washington’s introduction of reciprocal tariffs affecting more than 180 countries on April 2.

Based on the UN Conference on Trade and Development (UNCTAD), global economic expansion is anticipated to decelerate to 2.3 percent this year, dipping below the usual 2.5 percent threshold that often signals a global downturn.

This estimate highlights a marked decrease compared to the economic momentum observed in the years prior to the pandemic.

The UNCTAD Economic Policy Uncertainty Index surged to 460.2 in January, marking its highest level this century, indicating widespread nervousness about future policy direction.

Similarly, the World Trade Organization (WTO) has cut its forecast for global growth by 0.6 percent to 2.2 percent, attributing the adjustment to escalating tariffs and the growing unpredictability of policy.

The WTO also foresees a 0.2 percent shrinkage in global trade of goods this year, largely due to steep tariffs, with North America expected to be hit hardest by a noticeable reduction in exports.

This 0.2 percent decrease is projected as the pressure from trade tensions subsides somewhat following Trump’s 90-day tariff pause.

However, if the tariffs are reinstated, the downturn in global trade could deepen, potentially reaching a 1.5 percent contraction within the year.

Despite current headwinds, the WTO expects a modest recovery in the longer term, projecting the global economy to expand by 2.4 percent in 2026.

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