Japan Downgrades Global Economic Outlook Amid Rising US Tariff Concerns

Japan has lowered its outlook on the global economy, citing growing uncertainty around U.S. trade policy and the broader impact of tariffs introduced by President Donald Trump.

In its May economic report, the Japanese government acknowledged that global growth is stalling in some areas due to unresolved trade issues. This marks a shift from its previous assessment in April, which saw global growth gaining momentum.

For the first time in nearly three years, Japan also revised down its view of the U.S. economy, describing its growth as “moderating.” While Japan’s own economy remains in a “moderate recovery,” officials warned that escalating U.S. tariffs and market volatility could derail this progress.

The report pointed to ongoing price hikes affecting consumer sentiment and spending as additional risks. Japan’s economy contracted by 0.7% in the first quarter of 2025, and exports to the U.S. have dropped significantly.

The International Monetary Fund also cut its 2025 global growth forecast by 0.5 points to 2.8%, largely due to the ripple effects of U.S. trade actions. Despite a temporary truce in the U.S.-China trade war, persistent policy uncertainty continues to rattle global markets and delay corporate investments.