US and world in a déjà vu as tariff impact on economic projections are equivalent to 2008 crisis

World looks no different than 2008

The impact of tariff war on the US and world would be somewhat similar to the global financial crises in 2008, at least as far as IMF projections are concerned.

A Moneycontrol analysis shows that tariffs are expected to shave off nearly as much from US’ growth estimate as the onset of the housing crisis did in 2008.

World Economic Outlook released by the International Monetary Fund on April 22 pegged the impact of tariffs to US growth at 0.9 percentage points. While the fund had projected the economy to grow 2.7 percent in 2025 in January, it revised its projection down to 1.8 percent in April.

In the April 2008 update, following the start of the housing crisis, IMF had slashed US growth forecast a percentage point.

The global economy also finds itself in a similar situation as global growth is expected to slump by 0.5 percentage points compared with the previous projection.

The 2025 update cut global growth forecast for the current year to 3 percent from 3.5 projected in January. In 2008, IMF had reduced the growth projection to 3.7 percent in April compared with 4.2 percent estimated in January update of its release.

China, the economy US expects to hurt with tariffs, is also expected to similar effects to 2008. The East Asian nation is expected to see growth decline 0.6 percent compared with 0.7 percent in 2008.

India sits relatively better. While the IMF had projected the economy to lose 0.5 percentage points of growth in 2008 (FY09), this fiscal year is expected to turn out better with 0.3 percentage point dip.

Indian economy is expected to grow 6.2 percent compared with 6.5 percent, as domestic economy provides support.

Same, same, yet different

Unlike the global financial crisis, the effects of tariffs are not expected to linger for longer as the world adjusts.

The April 2025 update pared down global growth by 0.3 percentage points and American growth by 0.4 percentage point, unlike the 2008 situation where IMF predicted a bigger 0.6 percentage point and 1.2 percentage point hit respectively.

For India though, it could be a déjà vu as the decline expected is similar at 0.2 percentage points. The IMF predicts economy to grow 6.3 percent in 2026 (FY27).

The IMF projections are based on April 2 announcement by Donald Trump to impose country-specific reciprocal tariffs. The US President Donald Trump has since paused these tariffs and imposed a 10 percent blanket tariff on most countries barring China.

The US is also considering scaling down its response to China’s retaliation. Both countries had levied over 100 percent duties on imports from each other.