A recent IMF study indicates that rising tariffs could lead to a 1 percent drop in global GDP by 2026. Chief economist Pierre-Olivier Gourinchas cautions that such policies harm everyone. The U.S. GDP may fall by 0.4 percent in 2025 and 0.6 percent in 2026, impacting economic growth amid bi-partisan tariff support.
A recent IMF study warns that increased tariffs could significantly impact global economies, predicting a nearly 1 percent decline in global GDP by 2026. The IMF’s chief economist, Pierre-Olivier Gourinchas, emphasized the negative effects of tariffs on global growth during an interview, highlighting that this policy is detrimental to everyone involved. This looming economic threat could cast a shadow over the upcoming elections, affecting Americans irrespective of the election outcomes. According to the IMF’s October World Economic Outlook report, the U.S. GDP might decrease by 0.4 percent in 2025, and 0.6 percent in 2026, if substantial parts of global trade face tariffs by mid-2025. This scenario forecasts a global GDP decline of 0.8 percent by 2025 and 1.3 percent by 2026. The study modeled the potential consequences of a 10 percent tariff on trade among the U.S., E.U., and China while considering other variables like migration restrictions and increasing global borrowing costs. In his campaign, former President Trump proposed striking tariffs as high as 60 percent on Chinese goods and raised a general tariff to 20 percent, a figure considered arbitrary by some economists. Scott Lincicome from the Cato Institute noted that these suggestions lack rigorous economic modeling. He argued that while Trump’s tariffs would be drastically worse, Vice President Kamala Harris’s stance remains less defined amid her inconsistent tariff policies. Harris, who previously confirmed the continuation of Trump’s tariffs, recently indicated a preference for targeted tariffs meant to support American workers and address international adversaries. Political analysts point out that supporting tariffs has become a norm in Washington, driven by the perception that they resonate with crucial voter bases, despite public opinion polls suggesting otherwise. The persistent bipartisan support for tariffs could lead to escalating costs and a slowdown in economic growth for all Americans, as foreseen by the IMF’s projections.
The backdrop of this discussion hinges on a troubling trend observed by the International Monetary Fund, which is closely analyzing global trade dynamics in light of rising tariff measures. With bipartisan backing for tariffs gaining momentum among American politicians, the consequences loom large for economic stability. The forecasted decline in GDP worldwide reveals the intricate balance of trade policies and their profound ripple effects across economies, underscoring the urgency of addressing these critical issues going into the elections and beyond.
In summary, the surge in global tariffs is projected to cause a significant downturn in the economy, with nearly a 1 percent drop in global GDP by 2026. The IMF’s alarming findings warn of potential negative consequences for both domestic and international markets, ultimately affecting American citizens regardless of election results. Strikingly, both major political parties seem aligned on tariff policies, which could lead to increased economic burdens for the populace.
Original Source: reason.com
