In its most recent World Economic Outlook, the International Monetary Fund (IMF) said it expects tariffs to slow global economic growth this year, and perhaps usher in a new period of slower global growth. The IMF and World Bank are holding their spring meeting in Washington this week, bringing together business leaders from around the world. The IMF believes tariffs from the US could spark a global trade war, which is likely to soften economic activity.

• The IMF expects the global economy to grow by 2.8% this year, which is down from its earlier projection of 3.3%. The IMF warned that tariffs could spur a global trade war, which would drag down economic activity. The economic organization also lowered its projection for growth in 2026 to 3%.
• The IMF lowered its projection for US economic growth this year from 2.7% to 1.8%. Weaker demand combined with trade and policy uncertainty will weigh on economic conditions in the world’s largest economy.
• The economic organization projected Europe’s economy to expand by 0.8% in 2025, which would largely be in line with the pace of growth in 2024.
• China, on the other hand, is expected to see growth slow to 4.0% this year, compared to 5.0% last year. Trade tensions between the US and China have escalated in recent weeks, with both countries imposing higher tariffs on one another.
• The IMF sees Canada’s economy expanding by 1.4% in 2025. Trade disruptions with the US are expected to weigh heavily on Canada’s economy. Canada’s economic growth was relatively solid by the end of 2024.

Unsurprisingly, the IMF sees trouble ahead as global trade tensions grow. Global economic growth is expected to slow, with some market participants expecting a recession this year. Tariffs and slower global economic activity might weigh on Canada’s economy, which has dragged down consumer and business confidence in recent months.

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