Consequences of the trade war
US economy shrinks surprisingly
Donald Trump’s trade war harms the US economy more than using it. Economists must now correct their forecasts downwards.
According to the International Monetary Fund, the trade war instincted by Trump will not pay off for the United States. The US economy has lost a lot of driving and surprisingly shrunk in the first quarter of the year. The gross domestic product (GDP) fell by 0.3 percent in the first three months, as the Ministry of Commerce in Washington announced, according to an initial estimate.
On the other hand, economists surveyed by the Reuters news agency expected 0.3 percent growth. In the final quarter of 2024, it was enough for an increase of 2.4 percent.
Corrected forecasts for US economy downwards
The IMF recently drastically corrected its forecasts for the US economy. According to this, the US economy in 2025 should still increase by 1.8 percent and in 2026 by 1.7 percent. However, the estimated growth rate is 0.9 and 0.4 percentage points below the IMF forecast in January when Trump moved into the White House again.
The US Federal Reserve Fed also looks at exactly how the US president’s customs policy affects the economy and wants to take this into account in its monetary policy. The currency keepers around Fed boss Jerome Powell recently left their key interest rate at 4.25 to 4.50 percent, but also declared that they should act if necessary.
More shortly at stern.de.
Dpa · Reuters
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Source: Stern
