IMF Raises US Growth Outlook Amid Trump Tariffs/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ The International Monetary Fund has slightly increased its growth forecast for the U.S. and global economies, citing lower-than-expected disruption from Trump administration tariffs. U.S. growth is now expected to reach 2% in 2025, driven by resilient trade and private sector adaptability. However, the IMF warns that long-term risks and inflationary pressures remain.
US Economic Outlook Quick Looks
- IMF upgrades U.S. 2025 growth forecast to 2%
- Tariff disruptions from Trump administration less severe than predicted
- Global growth revised up to 3.2% for 2025
- U.S. economy bolstered by pre-tariff imports and supply chain shifts
- Inflation and slow hiring raise longer-term concerns
- Retailers and importers absorbing most of tariff costs so far
- China’s export strategy shifts toward Europe and Asia
- AI investment boom helps offset trade tension impact
- European growth improves, led by German military spending
- IMF calls current resilience “temporary relief,” not structural strength
Deep Look: IMF Sees Stronger US Growth Despite Trade Tariffs
WASHINGTON (AP) — The International Monetary Fund (IMF) has upgraded its growth projections for the U.S. and global economies, suggesting that recent tariff policies from the Trump administration have had a smaller short-term impact than many analysts feared. In its October 2025 World Economic Outlook, the IMF now anticipates 2% growth for the U.S. in 2025, slightly above its prior 1.9% forecast.
This modest uptick marks the second consecutive increase in the IMF’s forecast this year, following a 1.8% projection in April. For 2026, the fund expects U.S. growth to hit 2.1%, also a tenth of a percent higher than the previous outlook.
Global economic growth is expected to rise to 3.2% this year, up from 3% in July, with the 2026 forecast holding steady at 3.1%.
While the numbers show economic resilience, the IMF cautions that the true impact of the Trump administration’s tariffs is still unfolding. President Trump’s aggressive tariff strategy, once expected to stall global growth, has so far proven less damaging — largely due to swift and strategic adjustments by businesses and foreign governments.
“The United States negotiated trade deals with various countries and provided multiple exemptions,” said IMF Chief Economist Pierre-Olivier Gourinchas in a blog post. “Most countries refrained from retaliation, keeping instead the trading system largely open. The private sector also proved agile, front-loading imports and speedily re-routing supply chains.”
By importing goods in bulk before tariffs took effect, U.S. companies delayed price hikes and maintained inventory, softening the initial economic shock. Yet, the IMF warned this flexibility may mask deeper vulnerabilities.
“These improvements reflect temporary relief, rather than underlying strength in economic fundamentals,” the report noted.
Additionally, import price data suggests U.S. retailers and importers—not foreign manufacturers—have borne the brunt of the tariffs so far. That cost is likely to be passed along to consumers in the future, potentially adding to inflation pressures.
Already, core inflation has edged up to 2.9%, compared to 2.7% a year ago, based on the Federal Reserve’s preferred measure. Meanwhile, hiring has slowed significantly, possibly due to business uncertainty around future trade policy.
While the IMF’s projections are more optimistic than those of many private analysts, concerns remain. A recent survey by the National Association for Business Economics (NABE) found that most economists expect tariffs to reduce U.S. growth by up to 0.5 percentage points.
Still, certain trends are helping to balance out the downside:
- The tight labor market, partly due to reduced immigration, is keeping unemployment low despite slower hiring.
- A surge in AI-related investment, particularly in data centers and computing infrastructure, is fueling new economic activity and business growth.
Globally, other economies are adjusting as well. China, hit hard by U.S. tariffs, has shifted its trade strategy by boosting exports to Europe and Asia and allowing its currency to depreciate — making its goods cheaper abroad. The IMF expects China’s economy to grow 4.8% in 2025 and 4.2% in 2026, in line with earlier forecasts.
Europe is also showing signs of recovery. Germany, long criticized for under-spending, has ramped up government expenditures on defense, aiding eurozone growth. The IMF now predicts that the 20-nation euro area will grow 1.2% in 2025, up from 1%, with 2026 growth holding steady at 1.1%.
While this upward revision from the IMF offers cautious optimism, Gourinchas emphasized that ongoing political volatility and delayed trade consequences could still impact long-term performance.
The IMF, a 191-member international financial institution, plays a key role in monitoring the global economy, providing financial support to countries in crisis, and publishing authoritative forecasts on global financial trends.
As tariff threats remain part of U.S. trade rhetoric, economists and investors alike will continue to track how businesses and markets adjust — and whether current growth trends can be sustained in the years ahead.
You must Register or Login to post a comment.