The World Bank has downgraded its economic outlook for the United States and the rest of the world, warning that President Donald Trump’s sweeping tariffs and unpredictable trade tactics are weighing heavily on global commerce and investor confidence.

In its updated Global Economic Prospects report released Tuesday, the Washington-based institution projected that the U.S. economy will expand by just 1.4% in 2025, a sharp slowdown from the 2.8% growth recorded in 2024. That’s also a steep drop from the 2.3% forecast issued in January, reflecting the fallout from Trump’s escalation of trade tensions with key partners.

While the report avoids mentioning Trump by name, it directly blames a “substantial rise in trade barriers” for the slowdown. Trump’s policy of imposing 10% tariffs on imports from nearly every country, coupled with abrupt policy reversals and retaliatory measures by U.S. trading partners, has triggered price hikes for consumers, disrupted supply chains, and deepened global uncertainty.

“The world economy today is once more running into turbulence,” said Indermit Gill, the World Bank’s chief economist, in the report’s preface. “Without a swift course correction, the harm to living standards could be deep.”

Globally, the World Bank now expects growth to come in at 2.3% in 2025, down from 2.8% in 2024. The bank cut 0.4 percentage points from its earlier projection, citing a combination of weaker investment, trade friction, and monetary tightening still playing out in several economies.

Fallout Beyond the U.S.

Trump’s trade war is having ripple effects far beyond American borders. Europe, China, and other major economies are all feeling the strain.

In the Eurozone, growth is expected to slow to 0.7% in 2025, down from an already tepid 0.9% last year. European exporters, especially Germany and France, have been hit by Trump’s tariff regime. Worse still, businesses are holding back on investment due to the erratic nature of Trump’s trade measures, which are often announced, postponed, or restructured without warning.

In China, growth is expected to fall from 5% in 2024 to 4.5% this year, and then down to 4% in 2026. The world’s second-largest economy is grappling not only with the trade barriers imposed by the Trump administration but also with a real estate crisis and demographic pressures as its population ages.

India, while still the fastest-growing major economy, is also seeing its momentum taper. Growth is now projected at 6.3% for 2025, down from 6.5% last year and below the 6.7% forecast earlier this year. In Japan, growth is expected to pick up slightly—from 0.2% to 0.7%—but remains well below the 1.2% that had been projected.

Rising Concern Among Global Watchdogs

The gloomy revision from the World Bank echoes warnings from other global institutions. Just last week, the Organization for Economic Cooperation and Development (OECD) also trimmed its growth forecasts for the U.S. and global economies, citing similar concerns about escalating trade barriers and policy unpredictability.

The World Bank said the global economy has lost the chance for a “soft landing” after the pandemic, where inflation could be tamed without triggering a sharp downturn. Instead, the world now risks stagnation or worse, as countries struggle to balance growth against financial stability.

“Living standards in many countries could face long-lasting damage,” the report warned, pointing to reduced household incomes, rising food prices, and weakened investor confidence as key risks.

The bank reiterated its core mission to reduce poverty and promote shared prosperity by extending grants and low-interest loans to developing countries—many of which are also facing rising debt burdens and inflationary pressures amid weaker global trade.

Unless there is a coordinated policy response to reverse the course of rising protectionism and restore investor confidence, the World Bank cautions, the global economy may remain stuck in low gear for the foreseeable future.

TAJBank, Nigeria’s flagship non-interest lender, has secured regulatory clearance for the second tranche of its ambitious N100 billion Mudarabah Sukuk bond programme, announcing a new N20 billion issuance that offers a 20.5% annual return to investors.

The new issuance, officially announced on Tuesday, comes nearly two years after the bank broke new ground with its maiden N10 billion Sukuk bond in 2023. That inaugural offering—Nigeria’s first-ever Sukuk to be listed on the Nigerian Exchange—was oversubscribed by 115%, reflecting strong investor interest in sharia-compliant, profit-sharing investment options.

TAJBank’s second Sukuk tranche is structured under the Mudarabah model, where funds are pooled into profit-generating ventures managed by the bank, with investors entitled to a share of the profits. The bank said the latest issuance aims to broaden financial inclusion and attract ethically driven investors seeking stable returns amid volatile market conditions.

“This second tranche presents another opportunity for individuals and corporate investors to stake their funds in an ethical instrument with a competitive 20.5% per annum return,” the bank said in a statement.

Alhaji Tanko Isiaku Gwamna, Chairman of TAJBank, said the bond aligns with the lender’s core commitment to providing investment alternatives that are grounded in transparency, shared risk, and equitable profit-sharing principles. He noted that the issuance will allow a broader group of investors to benefit from the bank’s business success while adhering to non-interest banking standards.

Reaffirming TAJBank’s performance, Managing Director Hamid Joda recalled his 2023 pledge during the listing of the maiden bond, when he assured stakeholders of strong and consistent returns.

“The board has been fulfilling that promise since then,” he said.

Partnering for Scale and Trust

AVA Capital Ltd., the lead issuing house for the bond, reiterated confidence in TAJBank’s capacity to deliver returns to investors. AVA’s CEO, Mr. Kayode Fadahunsi, described the new N20 billion issuance as a critical step toward completing the broader N100 billion Sukuk programme, calling it a “milestone for ethical finance in Nigeria.”

Fadahunsi also emphasized that TAJBank’s growth in the non-interest banking segment has laid a solid foundation for investor confidence.

“We are optimistic that this Sukuk will not only deepen Islamic finance but also offer compelling returns, especially for investors looking for lower-risk alternatives outside traditional markets,” he said.

Broader Momentum in Nigeria’s Islamic Finance Market

TAJBank’s move comes amid a broader surge in Nigeria’s Islamic finance landscape, which is witnessing renewed momentum after years of slow traction. According to Fitch Ratings, non-interest banks in Nigeria recorded a 110% year-on-year asset growth by the end of 2024—driven by increased deposits and lending, each more than doubling within the year.

Fitch also projects that the Islamic finance industry will expand significantly between the second half of 2025 and 2026, supported by new regulatory incentives, capital requirements, and rising investor demand for Sukuk and other sharia-compliant assets.

The growing appetite was further demonstrated when Nigeria’s Debt Management Office (DMO) announced that the Federal Government had secured over N2.2 trillion in Sukuk subscriptions since its inaugural issuance in 2017—a figure that reflects an oversubscription rate of 735%, despite a two-year pause in sovereign Sukuk offerings.

Analysts suggest that TAJBank’s 20.5% return structure offers a compelling case for conservative investors amid inflationary pressures and volatile returns from equities and other traditional assets.

TAJBank’s successful issuance is expected to serve as a catalyst for further private Sukuk offerings in Nigeria, helping to complement the government’s sovereign Sukuk issuances. With the bank’s overall Sukuk programme still holding N80 billion in unissued potential, more tranches are expected in the coming years, offering even wider access to Nigeria’s expanding ethical investment market.

The United States and China have concluded two days of tense, high-level trade negotiations in London with what both sides describe as a breakthrough framework to restore the flow of rare earth metals and ease certain export controls — a deal now awaiting the approval of President Donald Trump and Chinese President Xi Jinping.

The talks, held behind closed doors at Lancaster House near Buckingham Palace, include US Commerce Secretary Howard Lutnick and US Trade Representative Jamieson Greer, while China dispatched Vice Premier He Lifeng and chief trade negotiator Li Chenggang. Over 20 hours of negotiations culminated in a late-night agreement on Tuesday, with officials describing the mood as “intense but productive.”

Lutnick confirmed that the two delegations had agreed on a path forward to implement the Geneva consensus reached last month, which had aimed to scale back tariffs imposed during the prolonged trade war.

“First we had to get sort of the negativity out,” Lutnick told reporters. “Now we can go forward to try to do positive trade, growing trade.”

Rare Earths at the Heart of a Larger Shift

The centerpiece of the agreement is China’s commitment to accelerate shipments of rare earth metals — elements critical for electric vehicles, missile guidance systems, smartphones, and other advanced technologies. In return, Washington will begin unwinding select export controls, particularly those related to industrial software and components needed by Chinese manufacturers.

This mutual compromise on rare earths and strategic goods is being interpreted by insiders as a potential inflection point. It’s believed that by resolving the long-standing deadlock on rare earth exports, both sides may be able to build momentum for addressing broader tariff disputes and other contested areas in trade.

Analysts note that rare earths have emerged as one of the most powerful bargaining chips in the US-China trade standoff. China controls over 70% of the global supply, and disruptions in recent months triggered alarm across major economies, particularly in Europe and Asia, where automakers and defense contractors have warned of production slowdowns.

While negotiators expressed cautious optimism, the agreement is still tentative. “We’ve got a framework, but we still need our principals to sign off,” said China’s Li Chenggang as he addressed reporters outside the historic venue around midnight.

The positive tone offered some relief to investors who feared an escalation in trade tensions. Markets responded with limited enthusiasm — US equity futures edged lower, the offshore yuan remained stable, and China’s CSI 300 Index gained nearly 1%, marking its best day in weeks.

“Markets will likely welcome the shift from confrontation to coordination,” said Charu Chanana, chief investment strategist at Saxo Markets. “We’re not out of the woods yet — it’s up to Trump and Xi to approve and enforce the deal.”

If approved, the rare earth arrangement is expected to act as a springboard for resolving contentious disputes on steel and aluminum tariffs, industrial overcapacity, and digital services taxes — all of which have weighed heavily on bilateral trade since 2018.

The Chips-for-Metals Conundrum

Lutnick hinted at concessions by Washington that would ease controls imposed under national security grounds.

“There were a number of measures the United States of America put on when those rare earths were not coming,” he said. “You should expect those to come off — sort of, as President Trump said, in a balanced way.”

That “balance,” however, is delicate. Export controls on semiconductor technologies and AI-enabling software remain politically charged in Washington, where hawks argue that loosening restrictions could empower Beijing’s military and surveillance capabilities. But Trump officials now appear willing to leverage some of those restrictions to secure concessions in other areas, especially rare earth access.

Wendy Cutler, a former senior US trade official, called the shift “unprecedented,” warning that the deal’s durability depends on sustained political will.

“It took two days, three US Cabinet members, and a Chinese vice premier just to get back to upholding the Geneva accord,” she wrote on LinkedIn. “That’s a preview for the next 60 days.”

What’s Next: 60 Days to Resolve Broader Issues

The Geneva deal in May established a 90-day pause on retaliatory tariffs, set to expire in early August. The current framework on rare earths buys time, but trade remains volatile. US imports from China dropped sharply in May, marking the worst contraction since early 2020, when China’s economy was shuttered by COVID.

Among the unresolved issues is China’s industrial overcapacity — particularly in steel, solar panels, and electric vehicles — which the US argues has led to global price distortions. In addition, the Trump administration has pressed China for measurable action on fentanyl production, an issue it cited in levying a 20% tariff earlier this year.

“President Trump is watching fentanyl closely,” said Jamieson Greer. “We would expect to see progress from the Chinese on that issue in a major way.”

No further meetings are currently scheduled, but both sides say discussions will continue remotely. “We hope the progress we made will be conducive to building trust,” Li Chenggang added.

Beyond trade data, what’s been most damaged by the years-long standoff is trust. According to Josef Gregory Mahoney, a professor of international relations at East China Normal University, “We’ve heard a lot about agreements on frameworks for talks, but the fundamental issue remains: Chips vs rare earths. Everything else is a peacock dance.”

However, many believe the rare earth deal may mark the beginning of a pragmatic phase. If both leaders endorse the proposal, it could open the door for more substantive discussions — not just on trade, but on global supply chains, climate coordination, and digital governance.