World Bank Slashes Global Growth Estimates As Trump Tariffs Increase Uncertainty

The World Bank has slashed its estimates for global economic growth in 2025 by 40 basis points to 2.30% on Tuesday, citing President Donald Trump's tariff policies and the resulting uncertainty behind the cut.

In its half-yearly Global Economic Prospects report, the World Bank said tariffs pose a“significant headwind” for economic growth, resulting in a cut in estimates for economies worldwide.

According to World Bank economists, nearly 70% of the world's economies are expected to see a decline in growth in 2025. This includes the U.S., China, Europe, and six other emerging market regions.

The bank projects the U.S. economy to grow at 1.40% in 2025 and 1.60% in 2026, marking a reduction of 90 basis points and 40 basis points, respectively, from its previous projections.

“Global cooperation is needed to restore a more stable global trade environment and scale up support for vulnerable countries, including those in fragile and conflict situations,” the World Bank report said.

It noted that 2025's projected growth is the slowest in the past 17 years, except during years when a global recession occurred.

It added that by 2027, the global economy in the 2020s decade is projected to grow at 2.5%. This would be the slowest growth in any decade since the 1960s.

The World Bank report says that if Trump's tariffs were halved from what they were in May, the global economy's growth would be stronger by 20 basis points over 2025 and 2026.

“The global economy today is at an inflection point. The forces that once drove economic convergence and lifted billions out of poverty are now in retreat,” the report added.

The World Bank report comes as officials from the U.S. and China engage in talks in London to discuss tariffs. U.S. Secretary of Commerce, Howard Lutnick, said the discussions between the two countries are“going well.”

Meanwhile, markets were marginally up as the U.S. and China engaged in trade talks. The SPDR S & P 500 ETF (SPY), which tracks the S & P 500 index, was up 0.26%.

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