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    World Bank Forecast Underscores Cost of U.S. Trade War

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    Along with a sharply downgraded projection for global output this year, it urged a “course correction” on trade to help preserve living standards.The global economy is projected to slow sharply this year as President Trump’s trade policy disrupts international commerce and increases economic uncertainty, the World Bank said on Tuesday in a report that underscores the toll of America’s trade war.Despite the weakening outlook, the global economy is not expected to fall into a recession, the World Bank said. However, the trade tension is setting the stage for the weakest decade of growth since the 1960s. Economic development in many of the poorest parts of the world has come to a standstill.Expansion in global output is forecast to slow to 2.3 percent in 2025 from 2.8 percent last year, the World Bank said in its Global Economic Prospects report. That is down from the 2.7 percent growth that it forecast in January.“The world economy today is once more running into turbulence,” Indermit Gill, chief economist of the World Bank, wrote in the report. “Without a swift course correction, the harm to living standards could be deep.”The United States enacted across-the-board 10 percent tariffs on imports and 50 percent tariffs on steel and aluminum imports this year. It has also threatened “reciprocal” tariffs on dozens of trading partners and raised tariffs on Chinese imports to 145 percent before lowering them to allow for trade negotiations.The tariffs have pushed the average effective U.S. tariff rate to the highest level in a century.The World Bank released its new forecasts as officials from the United States and China held their second day of trade talks in London. In recent months, the world’s two largest economies have each imposed export controls limiting the other’s access to a broad range of items critical to high-technology and military applications.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      Trump’s Tariffs Expected to Drag Down the Global Economy

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      Economic growth will slow this year and next as the trade war hampers development in the United States and around the world, the Organization for Economic Cooperation and Development said.President Trump’s trade war is expected to slow growth in the world’s leading economies, including the United States, this year and in the years to come, unless world leaders can resolve their differences over trade.The Organization for Economic Cooperation and Development slashed its outlook for global output to 2.9 percent this year, from 3.3 percent in 2024, the organization said in its economic report released on Tuesday.Economic growth in the United States is expected to be particularly weak, the organization said, rising 1.6 percent this year, a drop from the 2.2 percent projected in March, and 1.5 percent in 2026, down from its previous estimate of 1.6 percent. The U.S. economy grew 2.8 percent in 2024.“Through to the end of 2024, the global economy showed real resilience,” said Mathias Cormann, the organization’s secretary general. “But the global economic environment has become significantly more challenging since.”In the first three months of the year, economic growth in the countries monitored by the organization, which is based in Paris, “dropped abruptly” to 0.1 percent from the last three months of 2024, which is “the slowest rate of growth since the peak of the Covid-19 pandemic some five years ago,” Mr. Cormann said.Since taking office, Mr. Trump has imposed tariffs, then halted them for several weeks, then reinstated some, in the hopes of winning new trade deals with countries ranging from once-close allies like Canada, Mexico and the European Union, as well as longtime rivals like China.The lack of certainty coming from that on-again, off-again strategy, combined with frequent changes in how high the tariffs will eventually be, has roiled markets and disrupted the flow of goods and services around the world. From January to March, many companies rushed goods to the United States, hoping to avoid the higher tariffs, many of which are now set to take effect in July.Even if the Trump administration increases tariffs on most of America’s trading partners by just 10 percent, it would shave off 1.6 percent of economic growth in the country over two years, the report said. Growth on a global scale would contract nearly a full percentage point in the same time span.Further pressure is coming from the need for leading economies, such as those in the European Union, to increase military spending while also investing in the transition to a green economy, the report said.The economies of the 20 countries using the common euro currency are projected to grow to 1 percent in 2025 and 1.2 percent in 2026, in line with the O.E.C.D. forecast from March. China’s economy is expected to see 4.7 percent growth this year, and 4.3 percent in 2026, down 0.1 percent from the organization’s spring projection.Economists in the organization urged countries to reach agreements on trade and to increase investment to revive economic growth.“Our key recommendation, to all governments, is to engage with each other to address issues in a global trading system cooperatively,” Mr. Cormann said. More

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      Stanley Fischer, Who Helped Defuse Financial Crises, Dies at 81

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      He was the No. 2 at the Federal Reserve and the I.M.F. during periods of economic turmoil, and he mentored future economic leaders, like Ben Bernanke.Stanley Fischer, an economist and central banker whose scholarship and genial, consensus-seeking style helped guide global economic policies and defuse financial crises for decades, died on Saturday at his home in Lexington, Mass. He was 81.The cause was complications of Alzheimer’s disease, his son Michael said. Mr. Fischer served as the head of Israel’s central bank from 2005 to 2013, as vice chairman of the Federal Reserve Board from 2014 to 2017 and as the No. 2 officer at the International Monetary Fund from 1994 to 2001, when that agency was struggling to contain financial panics in Mexico, Russia, Asia and Latin America.As a professor at M.I.T., he was a thesis adviser or mentor to an extraordinary range of future leaders, including Ben S. Bernanke, later chairman of the Fed; Mario Draghi, president of the European Central Bank; and Kazuo Ueda, governor of the Bank of Japan. His former students also included two people who chaired the U.S. Council of Economic Advisers, Christina D. Romer and N. Gregory Mankiw, as well as Lawrence H. Summers, who served as secretary of the Treasury and president of Harvard University.“He had a role in shaping a whole generation of economists and policymakers,” Mr. Bernanke said in a February 2024 interview for this obituary. That included spurring Mr. Bernanke’s initial interest in macroeconomics and monetary policy.In 1998, The Times described Mr. Fischer as “the closest thing the world economy has to a battlefield medic.” He helped negotiate a rescue package for Russia by cellphone while standing atop a sand dune on Martha’s Vineyard, where he was on vacation. We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      Japan’s Debt, Now Twice the Size of Its Economy, Forces Hard Choices

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      Japan’s government faces pressure to curtail debt-fueled spending that some argue has staved off populist waves.Japan, which has the highest government debt among leading economies, is finding it difficult to spend like it used to.Debt-fueled public spending, enabled by low interest rates, has long been a way to address the country’s problems. Struggling farmers and emptying countrysides received generous payments from the central government. Relief aid during the Covid-19 pandemic morphed into new outlays for defense and subsidies to help consumers weather inflation.The spending continued even as more social security funding was needed for Japan’s growing number of seniors. Government debt has ballooned to nearly $9 trillion — more than double the size of the economy.Now, ahead of a heavily contested summer election, Japan’s ruling party is facing pressure to add even more debt. Small businesses hurting from U.S. tariffs are calling for government aid, and households squeezed by rising prices are demanding a rollback in taxes.But as the Bank of Japan moves away from the negative interest rates that for years made it easy for the government to borrow, the limits on spending are more stark.Recently, the market for Japanese government bonds has reflected concern about the country’s fiscal health. The yields on long-term bonds, an indication of investor confidence in the government’s ability to pay back its debts, rose to record highs at one point last week. And weaker-than-expected demand for an auction of 40-year bonds on Wednesday kept investors on edge.

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      Japan 30-year government bond yield
      Source: FactSetBy The New York TimesWe are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      Tariff Uncertainty Threatens to Drag Down Europe’s Economic Growth

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      The European Union scaled back its forecast for growth in 2025 by nearly half a percent, as the jump in tariffs and surrounding chaos bite.Europe’s economy will grow more slowly than expected this year, dragged down by trade uncertainty from President Trump’s tariffs, despite increasingly stable prices on consumer goods and energy, European Union economists said on Monday.In its spring economic forecast, the European Commission, the trade bloc’s administrative arm, said it expected the gross domestic product of the 20 countries using the euro to grow just 0.9 percent in 2025, down from the 1.3 percent that had been forecast last fall. Economic growth across the European Union is expected to increase 1.1 percent in the same period, down from a previous expectation of 1.5 percent, the commission said.Germany, Europe’s largest economy, has been hit particularly hard by the increase in tariffs, with the commission expecting that country’s economy to stagnate as exports decline 1.9 percent in 2025. France also had its projected growth rate cut to 0.6 percent from 0.8 percent, and Italy’s fell to 0.7 percent from 1 percent.“Heightened global uncertainty and trade tensions are weighing on E.U. growth,” Valdis Dombrovskis, the European commissioner responsible for the trade bloc’s economy, told reporters in Brussels.The commission added that any de-escalation of the tensions between Europe and the United States set off by Mr. Trump’s imposition of a 10-percent import tax on European good could lead to stronger growth, as could new free trade agreements with other economic partners.On Monday, Britain and the European Union reached a deal aimed at removing some of the barriers to trade that Brexit had introduced.Growth is expected to return in 2026, the commission said, but it also scaled that projection back to 1.4 percent for the euro area, down from a previously projected 1.6 percent.One bright spot is the continued robustness of the European labor market, Mr. Dombrovskis said, citing 1.7 million jobs added last year and an expected two million to be added in the coming year.Increased spending on armaments and the military could help spur more growth across Europe, the commission said. The 500 billion euros the German government plans to invest in its defense infrastructure were not included in the forecast for this year, but they were expected to contribute a full percentage point to growth by 2028, Mr. Dombrovskis said.Germany has been stuck in stagnation for three years running, dragging down growth across all of the European Union.The economists also warned that the threat of further natural disasters, related to changes in the global climate, were a risk to growth. Europe suffered widespread flooding and extreme heat in 2024, and the continent is bracing for more extreme weather this year. More

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      India and UK Strike Trade Deal Amid Trump’s Tariff Upheaval

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      The two countries signed a deal three years after negotiations began to strengthen alliances in what the British prime minister called a “new era” of trade.Britain and India agreed to a trade deal on Tuesday, strengthening economic ties between two of the world’s largest economies amid President Trump’s upheaval of the global trade system.The deal, which the British government said would increase bilateral trade by £25.5 billion ($34 billion), comes three years after the negotiations began. Intense talks between Jonathan Reynolds, Britain’s business and trade secretary, and Piyush Goyal, India’s commerce minister, took place last week to finalize the outstanding issues.The British government said India had reduced 90 percent of tariffs on goods, and within a decade most of those would become tariff free. Duties on British whiskey and gin would be halved, to 75 percent, and eventually be lowered to 40 percent. India will also reduce its car tariffs, which exceed 100 percent, to 10 percent under a quota. Britain, in turn, reduced tariffs on clothes, footwear and food products including frozen prawns.Last year, trade in goods and services between India and Britain, the world’s fifth and sixth largest economies, totaled £42.6 billion, according to British data.The trade agreement comes as many countries are seeking to bolster alliances and trade flows after Mr. Trump sent shock waves through the global economy by announcing, and then pausing, high tariffs on dozens of countries. The uncertainty created by the policy whiplash is expected to dampen investment and economic growth around the world.Officials in Britain, which squeezed out 0.1 percent economic growth in the final quarter of last year, have tried to increase investment from foreign companies and sign more trade deals. Other negotiations, including those with South Korea, are continuing.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      Canada’s Political Landscape Upended by Trump, Trudeau and Tariffs

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      After nearly a decade in power, the Liberal Party seemed destined to be swept out on a wave of anti-incumbency sentiment. Then events took a surprising turn.Until January, polls suggested that the Conservative Party would handily regain power from the Liberals in any Canadian election held this year.Two things overturned that expectation: the resignation of Justin Trudeau as prime minister and President Trump’s trade war with Canada, along with his threat to annex the country and make it the 51st state by sowing economic chaos.Trump’s Trade WarWhile Mr. Trump pulled back from his initial threat of tariffs on everything imported from Canada, he has imposed several measures that hit key sectors of Canada’s economy: a 25 percent tariff on automobiles, aluminum and steel, and a similar one on Canadian exports that do not qualify as North American goods under the United States-Mexico-Canada Agreement, which he signed during his first term in office. An auto parts tariff of 25 percent is scheduled to take effect on Saturday. Last week, Mr. Trump suggested that the automobile tariffs, which are reduced based on their U.S.-made content, could be increased. He offered no specifics.Autos and auto parts are Canada’s largest exports to the United States, outside oil and gas. Canada Hits BackUnder Mr. Trudeau, Canada placed retaliatory tariffs on U.S. goods coming into Canada that are expected to generate 30 billion Canadian dollars, about $22 billion, in revenue over a year.After becoming prime minister in March, Mark Carney imposed an additional 8 billion Canadian dollars, about $5.7 billion, in tariffs, including a 25 percent levy on autos made in the United States — but not on auto parts. Automakers with assembly lines in Canada will still largely be able to bring in American-made cars of those brands duty free.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      China Girds for Economic Stress of Trump’s Tariffs

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      The economy grew steadily from January through March, but U.S. tariffs pose a risk for China in the coming weeks and months.President Trump’s tariffs have been good for China’s economic growth. At least they were over the first three months of the year, as the country’s factories raced to ship exports ahead of the trade restrictions.China’s National Bureau of Statistics reported on Wednesday that the country’s gross domestic product grew 1.2 percent from the last three months of 2024. If that pace continues, the Chinese economy will expand at an annual rate of 4.9 percent.But whether China can maintain that growth is shrouded in uncertainty.Pinned down by tariffs that threaten to freeze trade with its biggest customer, China’s economy is facing one of its greatest challenges in years.Growth in the early months of this year was propelled by rapidly rising exports and the manufacturing investment and production necessary to support those exports. Sales of electric cars, household appliances, consumer electronics and furniture were also strong because of ever-widening government subsidies for buyers.Then on April 2, Mr. Trump started escalating tariffs, which reached an extraordinary 145 percent for more than half of China’s exports to the United States.Mr. Trump’s first two rounds of tariffs on Chinese goods, 10 percent in February and again in March, had little immediate effect on exports. China’s overall exports in March rose 12.4 percent in dollar terms from a year earlier, as some exporters appeared to rush shipments to docks before tariffs could go even higher.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      UK Cuts Tariffs on Dozens of Products as Global Trade Tensions Rise

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      British officials also announced more financing for exporters as the country sought to protect firms hurt by tariffs.The British government ramped up actions to help protect businesses and households from some of the economic tumult created by President Trump’s decision to raise tariffs and upend the norms of global trade.The government said on Sunday it would suspend tariffs on 89 products for about two years to help businesses and consumers save money. The products include those for construction, such as plywood and plastics, and everyday household items, such as pasta and fruit juices.Officials will also increase financing support for exporters by 20 billion pounds ($26 billion), through partial loan guarantees, and give small businesses access to loans of up to £2 million.As Mr. Trump raises tariffs on most imports, including those from Britain, to a 10 percent base line and even higher for certain goods like cars and steel, the British government has sought to calm anxieties at home. Officials have said they want to move quickly to support companies as they try to sustain fragile economic momentum.“This week, we witnessed the uncertainty of a changing world,” Rachel Reeves, the chancellor of the Exchequer, wrote in The Observer, a Sunday newspaper. In response, the government “must rise to meet the moment,” she wrote.The announcements on Sunday followed other interventions by the government in recent days to bolster protections for firms affected by tariffs. On April 6, the government eased rules on electric vehicle sales after Mr. Trump imposed a 25 percent tariff on cars imported into the United States. British officials also relaxed regulations to speed up timelines for clinical trials to support the life sciences sector with Mr. Trump also expected to impose levies on the pharmaceutical industry.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More