Chief Economists Outlook May 2025

8Chief Economists Outlook Figure 2. US policy impact How would you characterize the likely impact of the new US government policies on the trajectory of the global economy? No significant change Short-term disruption Long-term shift US policy impact on the global economy Share of respondents (%)21 79 Source: Chief Economists Survey. (2025, April). The key shock to the global economy that has shaped this outlook was a series of historic changes in US trade policy, which have rocked confidence in the durability of key pillars of the post-World War II international economic order. On 2 April, the US announced a dramatic increase in import tariffs, including a baseline of 10% on most global goods, as well as much higher rates on a wide range of countries, pegged to their trade surpluses with the US.2 This shock to the global trading system triggered financial market convulsions.3 It was followed by the US announcing a 90- day pause on most of the higher tariffs it had announced, with the notable exception of those on Chinese imports, which were pushed higher to 145%, triggering a similar escalation on the Chinese side as well as the suspension of exports of a range of critical minerals.4 However, a month later, on 12 May, these measures were also paused with the US and China announcing a 90-day reduction of 115 percentage points on their bilateral tariffs, and a lifting of China’s export restrictions on minerals.5 While the pausing of most planned tariffs has brought significant relief, the post- pause outlook remains uncertain, and the volatility of decision-making has triggered questions about the continuing reliability and predictability of economic policy in the US. As the long-anticipated risk of a trade war between two economic superpowers came dangerously close to becoming a reality, trade-related uncertainty in the past three months has been higher than at any time since records began in 1960.6 In April 2025, it was far above COVID-19 pandemic-era highs.7 2 Foster, P . & Fleming, S. (2025). 3 The Economist. (2025b). 4 Bradsher, K. (2025); Smith, A. et al. (2025). 5 The White House. (2025). 6 Caldara, D. et al. (2020). 7 Georgieva, K. (2025).