Impact of Trade War on US and Global Economy

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 a delay in Federal Reserve rate cuts. The ratings agency has adjusted its forecast for US growth in 2025 down to 1.7% from an earlier estimate of 2.1%, with a further reduction to 1.5% for 2026. Global economic growth is anticipated to be 2.3% this year, slightly decreasing to 2.2% in 2026.

Eurozone and Other Economies at Risk

Moreover, Fitch has highlighted that the Eurozone's economy is likely to experience weaker growth than the 1.2% previously forecasted in December. While fiscal measures in China and Germany may mitigate some effects of US tariffs, countries like Mexico and Canada, with their significant trade exposure to the US, are expected to face technical recessions.