Economy

Fitch Predicts: Escalating Trade War to Curtail US and Global Economic Growth

Impact on US and Global Economy

Fitch Ratings has recently indicated that the ongoing global trade war, initiated by the Trump administration, is expected to significantly reduce growth rates in the United States and globally. This situation is also anticipated to lead to increased domestic inflation and a postponement in Federal Reserve rate cuts. The agency has adjusted its forecast for US growth in 2025 down to 1.7% from the previously estimated 2.1%, with a further reduction to 1.5% for 2026, down from 1.7%. Global economic growth is projected at 2.3% for this year and 2.2% for 2026.

Eurozone and Other Economies at Risk

Additionally, Fitch warns of a notably weaker growth in the Eurozone's economy than the 1.2% growth predicted in December. While fiscal easing in China and Germany is expected to somewhat mitigate the impact of US tariffs, Mexico and Canada are forecasted to face technical recessions due to their significant exposure to US trade.