World Bank says US growth rate could be cut in half as result of tariffs

Economic growth in the U.S. might halve this year as a result of President Trump’s tariff policies, while the global economy is set to suffer a more modest, but still significant, slowdown, the World Bank said Tuesday.

The Washington DC-based World Bank says that it expects the US economy to grow by just 1.4% in 2025. It should be noted thought that the economy under Trump has routinely outperformed expectations and forecasts, whether for growth or with possible recession fears.

The World Bank had forecasted a 2.3% growth rate in the US economy for the year back in January of this year. It cited “a substantial rise in trade barriers” as one of the main reasons for its prediction.

World Bank chief economist Indermit Gill wrote that the global economy has missed its chance for the “soft landing”—slowing enough to tame inflation without generating serious pain—it appeared headed for just six months ago. “The world economy today is once more running into turbulence,” Gill wrote. “Without a swift course correction, the harm to living standards could be deep.”

The Chinese economy is forecast to see growth slow from 5% in 2024 to 4.5% this year and 4% next. The world’s second-largest economy has been hobbled by the tariffs that Trump has imposed on its exports, by the collapse of its real estate market, and by an aging workforce.

The World Bank expects the 20 European countries that share the euro currency to collectively grow just 0.7% this year, down from an already lackluster 0.9% in 2024. Markets were unfazed by this report.

As we saw from the previous forecast mentioned from January 2025, it is possible that the forecast could change. Even if this slower growth rate were to happen, the US economy would stay comfortably the largest in the world.