International

US tariff push sparks concerns of global economic fragmentation and slowdown

Monday, 27 October 2025 5:03AM UTC

Expert analyses warn that the United States' aggressive tariff policies and shifting foreign aid approach are disrupting the rules-based international trade system, risking slower global growth and increased supply chain chaos.

The United States’ aggressive tariff policies and a foreign aid approach framed by a “grievance narrative” are profoundly reshaping the global economic order, sparking concerns among experts about lasting damage to both the US and the broader world economy. This shift was the focus of recent discussions at the Peterson Institute for International Economics in Washington, where specialists underscored the urgent need for multilateral cooperation to counter the growing tide of isolationism and tariff disruptions.

Hector Torres, senior fellow at Canada’s Centre for International Governance Innovation and a former International Monetary Fund (IMF) executive director, described the US tariff impositions as a “big disruption” that has driven global trade from a long-standing rules-based system towards a deals-based arrangement prioritising geopolitical considerations over economic rationality. This move, he warned, threatens to fragment global commerce and destabilize established trade norms. Maurice Obstfeld, senior fellow at the Peterson Institute and former IMF chief economist, condemned the reliance on tariffs as not only economically inefficient but regressive, disproportionately burdening lower-income Americans who face rising living costs. Obstfeld also criticised the US administration’s narrative framing other nations as unfairly exploiting the US, which he said fuels damaging isolationist policies that undermine American soft power by slashing foreign aid budgets at comparatively low cost.

This shift has elicited significant global repercussions. The IMF’s latest World Economic Outlook, released in mid-October, paints a cautious picture of subdued global growth with looming risks including renewed trade disputes. The International Monetary Fund has also highlighted the inflationary pressures and uncertainty unleashed by rising tariffs, particularly between the US and China, which now intensify volatility in global financial markets. Kristalina Georgieva, IMF Managing Director, has emphasised that while these policies may not trigger a global recession, they raise economic unpredictability and disrupt complex global supply chains, where tariffs complicate costs and hinder recovery efforts.

Additional global economic institutions have echoed these warnings. The World Bank cautioned that the proposed US tariffs—such as a 10% levy on global imports and increased duties on key trading partners including Canada, Mexico, and China—risk curbing global growth by an estimated 0.3 percentage points in 2025, a significant drag particularly for developing economies already facing their weakest prospects since 2000. Similarly, the World Trade Organization (WTO) projects a 0.2% decline in global trade in goods next year, with sharper reductions expected if US tariff policies escalate further. WTO officials have underscored how ongoing trade policy uncertainty impairs economic growth and undermines vulnerable nations.

The broadening scope of tariffs signals a deeper strategic challenge. Albert Park, Chief Economist at the Asian Development Bank, warned that these tariffs extend beyond bilateral US-China disputes and now jeopardise a wider set of East Asian export markets, including Vietnam, Laos, and Cambodia—with tariff rates hitting China’s exports at a combined 54%. This scenario complicates China’s export recovery amid existing economic headwinds and may accelerate its pivot toward boosting domestic consumption and diversifying trading allies. Park also suggested the United States might consider easing monetary policy in response to slowing domestic growth triggered by trade tensions.

At the Peterson Institute events, Mari Elka Pangestu, vice-chairwoman of Indonesia's National Economic Council, described the current juncture in global trade as a “watershed moment” in which the traditional multilateral order, long upheld by a dominant power, is eroding. She highlighted Indonesia’s recently concluded trade agreement with the European Union as a strategic move to offset the disadvantages wrought by US tariffs, demonstrating the importance of diversifying trade partnerships to mitigate risks posed by tariff-induced disruptions.

Parallel analyses from the OECD align with this perspective, predicting significant slowdowns in both US and global economic growth due to tariff-driven trade costs and uncertainty. The organisation’s forecasts have been downgraded substantially to 1.6% growth for the US in 2025 and around 2.9% globally, marking a clear cautionary signal about the negative economic fallout from sustained tariff policies. Retailers within the US, such as Walmart and Target, have already flagged price increases linked in part to these trade barriers, underscoring how consumer-facing inflationary pressures may intensify.

Furthermore, legal commentators note that the US’s widespread imposition of tariffs has triggered retaliatory measures from major trade partners, including China, the European Union, Canada, and Mexico, resulting in a dangerous cycle of escalating trade barriers. These developments complicate international supply chains, force businesses to navigate complex and shifting regulations, and have sparked diplomatic efforts aimed at rolling back tariff measures through negotiations such as the US-China Phase One Trade Deal and the USMCA agreement with North American neighbors.

Looking forward, experts at the Peterson Institute stressed the critical importance of preserving a rules-based multilateral trading system to prevent a fracturing of global commerce into conflict-prone blocs or “digital firewalls.” Hector Torres called for urgent WTO reforms, particularly around digital trade rules, to avoid a chaotic patchwork of regulations that could stifle innovation and economic integration.

Overall, while the US’s tariff stance is driven by a complex mixture of economic and geopolitical concerns, the consensus among leading economists and international bodies is clear: these policies risk slowing global growth, disrupting supply chains, inflating costs for consumers, and weakening the normative frameworks that underpin international trade. The overarching message is a call for renewed multilateral cooperation to restore stability and fairness to the global economic system, which remains vital for prosperity in an increasingly interconnected world.

📌 Reference Map:

Paragraph 1 – ^[1] (China Daily)
Paragraph 2 – ^[1] (China Daily)
Paragraph 3 – ^[1] (China Daily), ^[4] (AP News)
Paragraph 4 – ^[2] (Reuters), ^[5] (AP News)
Paragraph 5 – ^[3] (Reuters)
Paragraph 6 – ^[1] (China Daily)
Paragraph 7 – ^[6] (Time)
Paragraph 8 – ^[7] (The Law To Know)
Paragraph 9 – ^[1] (China Daily)

Source: Noah Wire Services

More on this

https://global.chinadaily.com.cn/a/202510/27/WS68fed01da310f735438b71b3.html - Please view link - unable to able to access data
https://www.reuters.com/business/finance/world-bank-warns-that-us-tariffs-could-reduce-global-growth-outlook-2025-01-16/ - The World Bank has cautioned that proposed U.S. tariffs, including a 10% tariff on global imports and higher duties on imports from Canada, Mexico, and China, could reduce global economic growth by 0.3 percentage points in 2025. Developing economies are particularly vulnerable, facing their weakest long-term growth prospects since 2000. The World Bank forecasts 2.7% global growth in 2025 and 2026, with growth in developing countries reaching 4%. Additional economic challenges include high debt, weak investment, sluggish productivity, and climate change costs. The Bank for International Settlements also highlighted increased risks of trade frictions. The World Bank urges developing countries to implement domestic reforms to boost investment and trade relations.
https://www.reuters.com/markets/us-tariffs-risk-slowing-global-growth-significantly-adb-chief-economist-says-2025-04-04/ - Albert Park, Chief Economist of the Asian Development Bank, warns that the United States' newly imposed broad tariffs could significantly slow both U.S. and global economic growth. Unlike previous U.S.-China trade disputes, this round of tariffs affects a broader range of countries, threatening East Asian export markets rather than merely shifting production across the region. Vietnam, Laos, and Cambodia are among the Southeast Asian nations facing high tariff rates. China, dealing with existing economic challenges, will now face a combined 54% tariff, hindering its export-driven recovery and potentially accelerating its pivot toward domestic consumption and alternative trading partners. Park also highlighted that these tariffs could prompt the U.S. Federal Reserve to lower interest rates in response to slowing domestic growth. Additionally, Southeast Asian economies may struggle to benefit from diverted trade due to their own high tariff burdens, and the uncertainty could cause capital outflows as foreign investors retreat from riskier markets. China has called on the U.S. to rescind the tariffs and has vowed to implement countermeasures, while maintaining its annual growth target at approximately 5%.
https://apnews.com/article/d15febaaaab65c7df8538cce170231eb - The International Monetary Fund (IMF) has warned that rising U.S. tariffs, particularly under the Trump administration’s recent trade policies, are expected to weaken global economic growth and increase inflation in 2025. While IMF Managing Director Kristalina Georgieva emphasized that these measures will not trigger a global recession, she noted that they have intensified economic uncertainty and disrupted global financial markets, especially in the U.S. Georgieva highlighted that the complex nature of global supply chains means tariffs could have widespread cost implications and stimulate domestic production only gradually. Despite former forecasts indicating nominal global growth at 3.3% and falling inflation from 5.7% in 2024 to 4.2% in 2025, the IMF is now expected to revise these projections amid escalating trade tensions, particularly with China. The ongoing tit-for-tat tariffs between the U.S. and China have further unsettled markets. Georgieva also called for renewed global cooperation to reduce trade barriers and restore fairness to the multilateral trading system. The IMF's full economic outlook will be released in the following week.
https://apnews.com/article/0dfd480d5cee52ff39b369b7c781695d - The World Trade Organization (WTO) announced that global trade in goods is projected to decline by 0.2% in 2025, largely due to U.S. President Donald Trump's evolving tariff policies and ongoing disputes with China. The WTO warned that the decline could intensify to a 1.5% drop if Trump implements his most severe 'reciprocal' tariffs. The impact is expected to be especially pronounced in North America, where exports are predicted to fall by 12.6% and imports by 9.6%. While Trump suspended the harshest tariffs for 90 days to allow more than 70 countries to address U.S. concerns, he continues to escalate tariffs on Chinese imports to 145% and is entangled in tariff discussions with Canada and Mexico. The WTO emphasized that ongoing trade policy uncertainty is hindering global economic growth, particularly affecting vulnerable economies. WTO Director-General Ngozi Okonjo-Iweala and Chief Economist Ralph Ossa highlighted the significant negative impact of trade uncertainty and tariffs on economic activity, calling for careful consideration of trade-offs in policymaking amid rising global trade tensions.
https://time.com/7290808/trump-tariffs-oecd-economic-forecast/ - The OECD has significantly downgraded its U.S. and global economic growth forecasts due to President Donald Trump's expansive tariff policies. The U.S. GDP growth is now projected to fall from 2.8% in 2024 to 1.6% in 2025 and 1.5% in 2026, primarily because of increased trade costs stemming from these tariffs. Global growth is also expected to slow to 2.9% in 2025 and 2026, down from 3.3% in 2024. The OECD warns that Trump's tariffs are causing uncertainty and disrupting global supply chains, hampering business investment and trade. The ongoing legal disputes surrounding tariff legislation further contribute to market instability. While inflation has recently declined to 2.3% after peaking at 9.1% in 2022, the OECD cautions that Trump's trade policies could push inflation up again, although declining commodity prices may mitigate the effect. Major U.S. retailers like Walmart and Target have begun raising prices, citing the tariffs among multiple factors. The OECD urges global cooperation to preserve the benefits of an open and rules-based trading system.
https://thelawtoknow.com/2025/04/03/tariff/ - The article discusses the legal implications of the U.S.'s new economic policies, particularly focusing on the aggressive use of tariffs and their impact on international trade relations. It highlights how these tariffs have provoked retaliatory measures from key trading partners, including China, the European Union, Canada, and Mexico. These nations have imposed countertariffs on American agricultural products, industrial goods, and consumer items, directly harming U.S. exporters. The result has been a cycle of escalating trade barriers, leading to diplomatic efforts to negotiate tariff reductions, such as the U.S.-China Phase One Trade Deal (2020) and USMCA negotiations. The article also examines the impact of these tariffs on international supply chains, noting that the legal uncertainty and economic unpredictability surrounding U.S. tariffs have disrupted global supply chains, forcing companies to adapt to shifting trade regulations and rising costs. It concludes by emphasizing the need for multilateral cooperation to counter isolationism and tariff disruptions.

Noah Fact Check Pro

The draft above was created using the information available at the time the story first emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed below. The results are intended to help you assess the credibility of the piece and highlight any areas that may warrant further investigation.

Freshness check

Score: 8

Notes: The narrative was published on October 27, 2025, making it current. The content references events up to mid-October 2025, indicating timely reporting. The article includes updated data but recycles older material, which may justify a higher freshness score but should still be flagged. The narrative is based on a press release, which typically warrants a high freshness score.

Quotes check

Score: 7

Notes: The quotes from Hector Torres, Maurice Obstfeld, and Mari Elka Pangestu are not found in earlier material, suggesting original or exclusive content. However, without access to the full text of the referenced events, it's challenging to confirm the originality of these quotes.

Source reliability

Score: 6

Notes: The narrative originates from China Daily, a reputable organisation. However, the article is based on a press release, which may affect the perceived reliability. The reliance on a single source for the quotes raises concerns about the comprehensiveness and potential bias of the reporting.

Plausability check

Score: 7

Notes: The claims about the impact of US tariff policies on the global economic order are plausible and align with existing analyses. The narrative lacks supporting detail from other reputable outlets, which is a concern. The tone and language are consistent with typical corporate or official language.

Overall assessment

Verdict (FAIL, OPEN, PASS): OPEN

Confidence (LOW, MEDIUM, HIGH): MEDIUM

Summary: The narrative is timely and presents plausible claims about the impact of US tariff policies on the global economic order. However, the reliance on a single source for quotes and the lack of supporting detail from other reputable outlets raise concerns about the comprehensiveness and potential bias of the reporting. The use of a press release as the primary source may also affect the perceived reliability.

US tariffs
global economy
trade policy