Global Trade War Impact

Fitch Ratings has issued a warning that the ongoing global trade war, initiated by the Trump administration, is set to significantly reduce economic growth in the United States and globally. This situation is also expected to lead to increased domestic inflation and delay anticipated Federal Reserve rate cuts. The agency has adjusted its forecast for US economic growth in 2025 down to 1.7% from a previous estimate of 2.1%, with a further reduction to 1.5% for 2026 from an earlier projection of 1.7%. Global economic growth is anticipated to be 2.3% this year, slightly decreasing to 2.2% in 2026.

Eurozone and Key Economies at Risk

Fitch also highlighted concerns over the Eurozone's economy, predicting weaker growth than the 1.2% forecasted in December. While fiscal measures in China and Germany are expected to mitigate some impacts of US tariffs, countries like Mexico and Canada, which have significant trade exposure to the US, are likely to face technical recessions.