Donald Trump’s return to the White House has shaken the foundations of the global economy.

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In April 2025, the US President launched a sweeping tariff offensive, imposing import duties on major trade partners in a dramatic bid to realign global commerce. The tariffs include a 10 per cent blanket duty on all US imports and a 145 per cent levy on Chinese goods—marking the harshest hit on America’s top trading partner. Additionally, tariffs include 60 per cent on Mexican products, 45 per cent on European Union imports, 35 per cent on Canadian goods, and 25 per cent on South Korean exports.

Recession risk surges, says Reuters poll

A Reuters poll conducted from April 1 to 28 among more than 300 economists across 50 countries painted a grim picture. Sixty percent of respondents said the risk of a global recession this year is “high” or “very high.” Only 66 economists believed the risk was low, including four who considered it “very low.”

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The poll also revealed that none of the economists surveyed believed the tariffs had a positive impact on global business sentiment. A staggering 92 per cent said the impact was negative, while only 8 per cent considered it neutral—mostly from India and other emerging economies.

The 2025 global growth forecast has been downgraded from 3.0 per cent to 2.7 per cent, with 28 out of 48 individual country projections revised downward. Economies like Mexico and Canada were among the hardest hit, with Mexico’s growth forecast cut to 0.2 per cent and Canada’s to 1.2 per cent, according to the Reuters survey.

In contrast, growth projections for China and Russia remained steady at 4.5 per cent and 1.7 per cent, respectively—indicating that some economies may be better positioned to weather the tariff storm.

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Small businesses raise red flags

The US Chamber of Commerce, one of the country’s most influential business groups, sent a formal letter to the White House warning that continued tariff hikes could cause “irreparable harm” to small businesses and push the economy into recession, as stated in a Reuters report.

Addressed to Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and Trade Representative Jamieson Greer, the letter urged immediate tariff relief.

“Higher costs and disrupted supply chains are endangering small businesses across America,” said Suzanne P. Clark, President and CEO of the Chamber, in a statement released on May 2. She added, “Whether it is coffee, bananas, cocoa, minerals or numerous other products, the reality is certain things just can’t be produced in the United States. Tariffs on such essentials only raise costs for struggling families.”

The Chamber requested automatic exclusions for small business importers, a system for case-by-case tariff exemptions where American jobs are at risk, and tariff waivers on goods not readily available in the US.

Trump admin: No recession, just renegotiation

Despite mounting concerns, US Treasury Secretary Scott Bessent insisted that the economy is not in recession, according to Reuters. Testifying before the House Appropriations Committee on May 6, Bessent claimed that while first-quarter GDP showed a dip, he expected upward revisions in the coming weeks. He also revealed that the US was in talks with 17 countries to secure new trade deals, though he admitted that no discussions had yet begun with China.

Still, official numbers suggest early signs of distress. According to the US Commerce Department’s April 2025 report, the country’s GDP contracted by 0.3 per cent in the first quarter—the first economic shrinkage in three years. Imports dropped 2.8 per cent, reflecting weakening domestic demand, while exports fell 3.6 per cent, indicating reduced global competitiveness due to retaliatory tariffs.

In response, China introduced steep counter-tariffs, prompting multinational corporations to slash revenue forecasts and stall expansion plans. Although the White House has announced a 90-day pause on the most aggressive tariffs, analysts say the damage to business confidence is already done.

“It’s hard for companies to plan even three months ahead,” said James Rossiter, Head of Global Macro Strategy at TD Securities. “Let alone envision what five years might look like,” as quoted by Reuters in April.

IMF narrates different story

Amid the uncertainty, the International Monetary Fund (IMF) offered a more measured outlook, according to a Reuters report. In its April 17 global forecast, the IMF acknowledged that tariff-related uncertainty is “literally off the charts” and warned of a growing erosion of trust between nations. However, it stopped short of declaring a global recession.

“Our new growth projections will include notable markdowns, but not recession,” said IMF Managing Director Kristalina Georgieva, speaking at the IMF Spring Meetings in Washington. She emphasized that global share prices had suffered amid heightened trade tensions and called for coordinated policy responses to restore stability.

“A better balanced, more resilient world economy is within reach. We must act to secure it,” Georgieva urged. She called on Europe to eliminate restrictions on internal trade in services, encouraged China to expand its social safety net to reduce precautionary saving, and urged the US to rein in its growing public debt.

Meanwhile, the World Trade Organization (WTO) projected a decline in global trade volumes due to the Trump tariffs. The European Central Bank reduced its key interest rate, citing growing trade tensions, while the Bank of England warned of increased risks to global growth and financial stability—developments widely reported by Bloomberg and Reuters.

From Inflation Control to Stagflation Fears

As inflationary pressures mount due to higher import costs, economists are now warning of stagflation—a dangerous blend of slow growth, rising unemployment, and persistent inflation. According to the Reuters survey, 19 out of 29 major central banks are expected to miss their inflation targets in 2025, and more than half may continue to miss them into 2026.

The Road Ahead

As negotiations inch forward, the global economy stands at a crossroads. Trump’s tariffs have disrupted a fragile post-pandemic recovery, spooked markets, and reignited fears of global economic disintegration. The long-term consequences may extend far beyond trade balances—impacting jobs, inflation, and investor confidence for years to come.