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The International Monetary Fund (IMF) cut it on Tuesday US growth forecast Other countries due to uncertainty about trade policies and lower demand.
The IMF report cut the US’s 2025 economic growth forecast to 1.8%, reducing it by 0.9 percentage points from its forecast gross domestic product (GDP) growth rate in January. We also reduced our forecast for 2026 by 0.4 percentage points to 1.7%.
This is thought to be attributed to the downgrade of economic growth estimates since the beginning of this year to “policy uncertainty, trade tensions and soft momentum momentum.”
“Since the release of the WEO update in January 2025, a series of new US tariff measures and measures by its trading partners have been announced and implemented, becoming US tariffs near April 2nd, bringing effective tariff charges to levels not seen in the first century,” the IMF said.
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Pierre-Olivier Gourinchas, chief economist of the International Monetary Fund (IMF), will speak on the “World Economic Outlook” at the IMF/World Bank Group spring meeting held in Washington on April 22, 2025. (Jim Watson/AFP via Getty Images/Getty Images)
“This in itself is a huge impact on growth. The unpredictability these measures are rolling out will have a negative impact on economic activity and outlook, and at the same time make it more difficult than usual to assume it will form the basis of a set of consistent and timely forecasts internally,” he added.
President Donald Trump’s trade policy went beyond the Smoot Holy tariffs of 1930, pushing the effective US tariff rates on all imports to the highest level in a century. Economists generally believe that Smoot Holy tariffs exacerbated the Great Repression by causing a decline in global trade.
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Duties are taxes on imports paid by importers, usually passing higher costs to consumers at higher prices. (Photographer: Getty Images/Sam Wolf via Getty Images/Bloomberg)
Global growth is also expected to slow down due to uncertainty about tariffs and trade policies, with the IMF forecasting growth of 2.8% in 2025 and 3% in 2026, down from 3.3% announced in January.
In the eurozone, economic growth is expected to be at 0.8%, which is 0.2 percentage points slower than previous forecasts.
In emerging markets and developing countries, growth is expected to slow to 3.7% in 2025 and 3.9% in 2026, with a major downgrade in countries where tariffs are most affected, such as China. China’s growth was reduced to 4% in 2025 and 2026, with downward revisions of 0.6 and 0.5 percentage points from its January forecast.
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President Trump’s tariffs have raised expectations of inflation and economic uncertainty. (Andrew Harnik / Getty Images / Getty Images)
The IMF report also raised its US inflation forecast to 3% in 2025, up 1 percentage point compared to the January forecast.
It cited “stubborn price dynamics in the service sector and recent rise in price growth for core commodities (excluding food and energy) and supply shocks from recent tariffs.”
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IMF chief economist Pierre-Olivier Gourinchas told reporters that the IMF does not predict that the US economy is currently not in a recession, but added that the likelihood of a recession has risen from about 25% to 37%.
Reuters contributed to this report.
