IMF: Tariffs Weigh Heavily On U.S., China & Global Economy | Pierre Gourinchas On Trump Trade Shock

The Trump tariffs are reshaping the global economy — and the IMF isn’t mincing words. In a powerful statement, Pierre-Olivier Gourinchas, Chief Economist of the IMF, breaks down how the sweeping U.S. tariff hike is playing out across the world. For the United States, the tariffs are acting as a supply shock — dragging down productivity, inflating prices, and causing the IMF to slash U.S. growth forecasts by 0.9%. Meanwhile, China’s growth forecast has been trimmed to 4%, with deflationary pressures building. Trading partners face a negative demand shock, and policy uncertainty is paralyzing global investment, echoing patterns seen during the pandemic. The risks to the world economy are firmly on the downside, with the IMF warning that the chance of a global downturn has nearly doubled—from 17% to 30% in just a few months. Despite the gloom, Gourinchas offers a roadmap: restore trade policy stability, maintain agile monetary policy, and push for fiscal prudence. Rich nations must also rebuild fiscal buffers while poor nations grapple with reduced aid and rising debt.