The World Bank has released numbers that show a lack of confidence in global market growth as a result of a variety of factors, including tariffs introduced by U.S. President Donald Trump.
On Tuesday, the latest report painted a picture of declining Gross Domestic Product (GDP) across the world, citing trade tensions and the U.S. implementation of tariffs.
"In short, many of the forces behind the great economic miracle of the last 50 years—when per capita GDP in developing countries nearly quadrupled and more than 1 billion people escaped extreme poverty—have swung into reverse," the report stated.
Why It Matters
GDP is a strong indicator of the economic health of countries worldwide. Slowed growth could represent significant risks for American households, businesses and the global economy.
The bank did not forecast a recession, but said that global growth would be the weakest outside of a recession since 2008.
What To Know
The report comes nearly three months after Trump announced a "Liberation Day," calling for a 10 percent minimum tariff on all imports and up to 145 percent on Chinese goods.
Following the move, the Treasury Department reported $15.9 billion in tariff collections for April, compared to $9.6 billion the previous month. But despite the revenue, tariffs have led to major tensions with a number of international trade partners, including China.
With the U.S. enacting the highest average tariff rate in a century—including 50 percent on steel and aluminum—the cost of imported goods has risen, while other countries have retaliated, limiting U.S. exports.
According to the World Bank report, the U.S. economy alone—which is the world's largest—is predicted to grow half as fast in 2025 than it did in 2024, with a drop from 2.8 percent to 1.4 percent.
The report directly ties this predicted slowdown to a substantial rise in trade barriers following the Trump administration's sweeping tariff campaign against major trading partners.
"It isn't theoretical anymore. It's measurable damage. The economy already contracted 0.3 percent in Q1, with Yale's Budget Lab projecting a sustained GDP reduction of 0.6 percent annually," Michael Ryan, a finance expert and the founder of MichaelRyanMoney.com, told Newsweek. "That translates to $180 billion in lost economic output every year. That's the equivalent of losing an entire state's economic contribution."
The World Bank issued a global call for a "course correction" in trade policy, underscoring the central role of U.S. leadership in international economic health.
"The inflation story is equally concerning. Consumer prices jumped 2.4 percent overall. When your grocery bill becomes a political statement, you know policy has crossed into daily life territory," Ryan said.
Possible Impact on Living Standards
World Bank chief economist Indermit Gill warned that, "Without a swift course correction, the harm to living standards could be deep." He noted the opportunity for a "soft landing"—slowing inflation without major economic disruption—had been missed.
The World Bank also predicted growth in China to slow to 4.5 percent in 2025, partly due to U.S. tariffs, a property market crisis, and demographic shifts. Growth in the eurozone is forecast at just 0.7 percent. India remains a bright spot, set to expand by 6.3 percent, though this is also below earlier predictions.
"Trump's own advisers can't agree on whether these tariffs are permanent policy or negotiating theater," Ryan said. "Treasury Secretary Bessent talks about negotiations while trade adviser Navarro declares 'this is not a negotiation.' We're essentially running two economic experiments simultaneously, and both have ugly endings."
What People Are Saying
Indermit Gill, World Bank chief economist, said in a statement: "The world economy today is once more running into turbulence... Without a swift course correction, the harm to living standards could be deep."
Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek: "Tariffs could dramatically affect the economic growth of the United States in the coming months and even years through two pivotal factors: higher prices for American consumers and concern internationally about the country's financial outlook."
Michael Ryan, a finance expert and the founder of MichaelRyanMoney.com, told Newsweek: "Even if tariffs generate $5+ trillion in revenue over a decade, they're twice as economically damaging as simply raising corporate taxes to achieve the same revenue. We're choosing the most destructive path to the same fiscal destination."
What Happens Next
The Trump administration reversed or suspended some broad tariffs in April to negotiate new trade deals, announcing a preliminary agreement with the United Kingdom and signaling more could soon follow.
The World Bank urged the U.S. and its trading partners to seek a "swift course correction" in trade policy. Negotiations on tariff reduction deals and updated trade rules are expected to continue as early-July deadlines for new agreements approach.
"While the United States saw a significant uptick in its tariff intake since the "Liberation Day" announcement, that could come at the cost of consumers paying more for everyday items, which could slow sales as many households look to cut back on spending," Beene said.
"Pair that with concern on fluctuating tariff rates internationally, which call into question how strong the American economy is for many international companies who rely on its consumer base for sales. It's easy to see why there is more worry than optimism."
Newsweek