As the U.S. backs off hefty tariffs in recent trade deals, strain on the global economy is easing, the International Monetary Fund said Tuesday.
The IMF upgraded its forecast since its last update in April, projecting 3% global growth this year. This projection came in 0.2% higher than April’s forecast which was released on the heels of President Donald Trump’s “Liberation Day” announcement.
Still, the IMF’s forecast is lower than last year’s 3.3% prediction. The report warned that the uncertain economic landscape that has taken shape amid back-and-forth tariffs could dampen economic activity.
“Elevated uncertainty could start weighing more heavily on activity,” the IMF said.
The IMF’s forecast illustrates that global commerce is not as gloomy as many economists predicted. This cautiously positive outlook can be attributed in part to the rush of U.S. imports that occurred in late spring and early summer as businesses worked to get ahead of Trump’s tariff deadlines.
Trump has imposed a slew of tariffs directed at specific industries and countries since taking office in January, including 30% tariffs on the European Union and Mexico and 50% tariffs on steel and aluminum imports.
In recent weeks, Trump has walked back these tariff threats after striking deals with numerous trading partners. The U.S. negotiated separate deals with the EU and Japan in the past week, setting their tariff rates at 15%.
“Global growth could be lifted if trade negotiations lead to a predictable framework and to a decline in tariffs,” the IMF said Tuesday.
The U.S. is mandating an Aug. 1 deadline when reciprocal tariffs on dozens of countries will take effect. The only trading partner excluded from this deadline is China, whose negotiations with the U.S. will continue into August.
Tuesday’s report predicts the U.S. economy to grow 1.9% in 2025, coming in lower than last year’s 2.8%. The euro area is forecasted to bump to 1% from last year’s 0.9%, and China’s economy is expected to grow 4.8%.
