Japan's central bank has halved its economic growth forecast for 2025, citing the global trade tensions stemming from President Donald Trump's trade policies as a significant factor. The Bank of Japan has lowered its GDP growth expectation to 0.5% from the previous 1.1%, and its outlook for the next year has also been reduced. This economic adjustment follows the U.S. Commerce Department's report of a slight contraction in the American economy due to reduced consumer spending and increased imports. In parallel, China's factory activity has seen a significant downturn, attributed to the ongoing tariffs between the U.S. and China. Despite Trump's claims of potential trade agreements with Japan, South Korea, and India, the complexity and urgency of such deals remain questionable, with broader implications for global economic growth as highlighted by the International Monetary Fund.

Japan's central bank has significantly reduced its economic growth forecast for 2025 to an anemic 0.5%, down from the previously expected 1.1%, due to the impact of the global trade war.

The revised economic outlook is attributed to the uncertainty and negative effects of ongoing trade tensions, which have clouded economic prospects and affected corporate profits.

In the United States, the economy has experienced a slight contraction in the first quarter, with consumer spending slowing and a buildup of imported goods leading to a negative trade balance.

China's factory activity has contracted at the fastest pace in 16 months, largely as a consequence of the significant tariffs imposed by the U.S. and China's retaliatory measures.

President Trump has mentioned potential trade agreements with Japan, South Korea, and India to replace existing tariffs, but he has downplayed the urgency of these deals, emphasizing that the U.S. does not need them.

The Trump administration is reportedly in active discussions with more than a dozen countries, aiming to establish revised trade agreements, but the complexity of these negotiations suggests a lengthy process.

The International Monetary Fund has warned that the ongoing global trade war is likely to hinder economic growth worldwide, with pronounced effects on the U.S. economy.