By Andrea Shalal, David Lawder and Nupur Anand

WASHINGTON (Reuters) – Worldwide economic output is set to slow as U.S. President Donald Trump’s steep tariffs affect trade. The International Monetary Fund (IMF) warned of this trend on Tuesday, as global finance chiefs gathered in Washington seeking negotiations to reduce these tariffs.

White House press secretary Karoline Leavitt noted brisk negotiations, with 18 countries proposing terms and Trump’s trade team scheduled to discuss tariffs with 34 nations this week. Trump is optimistic about a possible trade deal with China that could substantially reduce tariffs, potentially boosting markets.

Earlier this month, Trump established a baseline import tax of 10%, but paused the increase for 90 days to allow negotiations for less severe rates.

The urgency of the talks comes as finance and trade delegates arrive for the IMF and World Bank Group spring meetings, all aiming to ease tariffs that burden U.S. goods imports since Trump returned to office in January.

The IMF forecasts that tariffs have pushed global growth down to an expected 2.8% in 2025 from 3.3% in 2024. In the U.S., GDP growth is predicted to decline to 1.8% in 2025 from 2.8% last year, with rising import costs also increasing inflation.

China is notably affected, with the IMF lowering its growth outlook to 4.0%, hampered by U.S. tariffs as high as 145%. China retaliated with 125% tariffs on U.S. goods, creating a strained trade situation that U.S. Treasury Secretary Scott Bessent called unsustainable.

Bessent indicated a potential de-escalation in U.S.-China trade tensions but noted future negotiations would be challenging. Trump expressed hope for a deal with China that would lower tariffs, stating they wouldn’t remain as high as they currently are, but would not drop to zero either.

Following Trump’s comments, U.S. stocks responded positively, with companies like Amazon, Nvidia, and Apple seeing gains.

While little progress has been made with China, talks are advancing with other trading partners. The U.S. and Japan are reportedly nearing an interim trade arrangement, though significant issues remain unresolved. The U.S. and India have also agreed on a broad scope for future negotiations during Vice President JD Vance’s visit.

Several U.S. companies have reported the impact of tariffs, with Kimberly-Clark estimating a $300 million cost this year. GE Aerospace’s CEO met with Trump, advocating for a return to the tariff-free regime previously in place. Despite the tariffs, GE Aerospace maintained its outlook, which helped boost its stock values as investors reacted positively post-earnings reports amid ongoing tariff concerns. The S&P 500 index saw a rise of about 2.5% on Tuesday.