The impact of President Trump’s tariffs is expected to weigh on economic growth worldwide in 2025, according to the International Monetary Fund’s new World Economic Outlook released Tuesday.
“The outlook for the global economy continues to point to dim prospects, both in the short and the long term,” according to the IMF report.
Global growth is projected to decelerate to 3.2% this year from 3.3% in 2024 and skid further to 3.1% in 2026.
That growth forecast, little changed from the IMF’s estimates in July, reflects gradual adaptation to trade tensions. Growth is expected to be much lower than the pre-pandemic average of 3.7%.
And the IMF predicts much of the bite from tariffs could be yet to come. While the impact on rewiring of supply chains and inflation has been muted so far, the IMF said that may reflect a delay in higher prices and costs being passed through.
Very little of what would be expected to pass through to consumer prices has actually done so thus far, according to the IMF’s examination of certain goods. Household appliances, for instance, have reflected the cost of tariffs, but many categories, including food and clothing, have not, according to the IMF.
And companies may not be able to absorb higher tariff costs, as the US dollar has weakened with the onset of tariffs.