Economic forecasters at S&P lower their worldwide growth projections amid concerns over trade war escalations.
S&P's Grim Assessment of Global Economy: Tariffs Unleash Chaos
Brace yourself, folks! S&P Global Ratings has taken a sledgehammer to its worldwide economic growth projections, warning that Trump's trade tariffs will put a serious damper on global economic activity for years to come.
The ratings agency issued a stark warning about a potentially 'cataclysmic shift' in US trade policy that'll make global economic output a paltry 0.3 percentage points weaker this year and the next. The pain will be felt across all regions.
But that's not all – analysts suggest that the already dire growth forecasts could very well take a nosedive. After all, who knows how much deeper this economic hole will become as the tariff shock spreads and destabilizes the global economy?
What's more, S&P's seers aren't overly optimistic about the UK economy's short-term future, either. While they've bumped up their expectation for 2025 growth to 0.9 percent, they're predicting a weaker-than- expected 0.2 percentage points slowdown in 2026 at 1.4 percent.
So much for Trump's 'liberation day' tariffs bringing cause for cheer.
What's the Lowdown on S&P's Predictions?
- In the year 2025, the US economy will suffer a 0.5 percentage point dip as a result of Trump's trade war, with a GDP of just 1.5 percent.
- The US 2026 and 2027 projections have been slashed by 0.1 and 0.2 percentage points, respectively, but there's a slight increase expected in 2028, with a gain of 0.1 percentage point.
- The eurozone will take a hit too, with 2025 and 2026 growth forecasts being revised to 0.1 and 0.2 percentage points lower than initially projected. Germany, in particular, is expected to bear the brunt of the impact among major economies in the bloc.
S&P's revised numbers combine both direct and indirect effects of tariffs, including the size of the tariff, the exposure to the US as a trading partner, and the indirect effects like lower growth in all trading partners, as well as the impact of uncertainty and lower consumer and business confidence.
The global economic fallout from the escalating trade war is a clear demonstration that there are no winners in escalating protectionism. S&P warns of unexpected and non-linear economic effects as we enter uncharted waters of unprecedented tariff rates.
Stay tuned for more insights into the far-reaching consequences of Trump's tariffs on the global economy!
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[1] S&P Global Ratings. (2025, April). Global Economic Trends: A Shift Toward De-Globalization?. [Online] Available: https://www.spglobal.com/ratings/en/research/articles/250421-global-economic-trends-a-shift-toward-deglobalization-78866635
[2] FT. (2025, April). US economy shrinks 0.3% as Trump tariffs spark record stockpiling. [Online] Available: https://www.ft.com/content/884a48f1-bf61-4e95-ba48-b8066b32180d
[3] HM Treasury. (2025, April). Spring Budget 2025. [Online] Available: https://www.gov.uk/government/publications/spring-budget-2025
[4] Barclays. (2025, April). Barclays forecasts four UK rate cuts and reveals its worst-case scenario for the economy. [Online] Available: https://www.telegraph.co.uk/business/2025/04/03/barclays-forecasts-four-uk-rate-cuts-reveals-worst-case-scenario/
[5] European Central Bank. (2025, March). ECB Economic Bulletin Issue 1 2025. [Online] Available: https://www.ecb.europa.eu/pub/economic-bulletin/2025/01/html/ecb.ebbul_issue1_2025_en.html
[6] The World Bank. (2025, April). Global Economic Prospects. [Online] Available: https://www.worldbank.org/en/publication/global-economic-prospects
- S&P Global Ratings, in their latest report, highlights the downside of investing in the global economy due to the tariffs, particularly in 2025, as they forecast a 0.5 percentage point dip in the US economy with a GDP of 1.5 percent.
- The revised projections for the US economy by S&P Global Ratings include a 0.1 percentage point cut for 2026 and another 0.2 percentage point cut for 2027, but a slight gain of 0.1 percentage point is expected in 2028.
- S&P Global Ratings also foresees a hit for the eurozone, with 2025 and 2026 growth forecasts being revised to 0.1 and 0.2 percentage points lower than initially projected, respectively.
- If one is looking to invest, popular DIY investing platforms like Trading 212 could be a consideration, among others such as AJ Bell, Hargreaves Lansdown, interactive investor, InvestEngine, and so forth, each offering a unique set of features.
