US Economy Shows Unexpected Resilience Despite Trump Tariffs Says IMF

The United States economy has proven more robust in the face of record protectionism than previously forecast, according to assessments from the International Monetary Fund as it prepares to release its latest analysis of President Trump’s trade tariffs. Kristalina Georgieva, the IMF’s managing director, remarked that fears of a recession and surging unemployment related to these tariffs had yet to materialise. “When we met in April, many experts predicted an imminent US recession. Instead, both the US and several other economies have held up,” Georgieva observed in her remarks ahead of the fund’s annual meetings.

The IMF attributed the resilience of the global economy to lower-than-feared overall effective tariffs. While the US was expected to reach a protectionism rate of 23 per cent in April, negotiations and certain trade deals have seen the effective level settle at 17.5 per cent. Though this remains the highest since the 1930s, the world has thus far avoided a damaging cycle of retaliatory trade measures. Georgieva noted that while global openness has taken a blow, the feared cascade into a full-scale trade war has not occurred.

US businesses have adjusted their strategies in response to the threat of border taxes, expediting import orders ahead of tariff increases and reorganising supply chains to mitigate effects. Strong corporate balance sheets, bolstered by several years of solid profits, have further supported this adaptability. “Both reflexes and balance sheets are in good condition after years of economic shocks,” said Georgieva, summarising the situation facing both US firms and the wider world economy.

Projections indicate a modest global growth slowdown for this year and into 2026 following the 3.3 per cent expansion in the previous year. The IMF’s recent forecasts expect US growth to decelerate from 2.8 per cent in 2024 to 1.9 per cent this year, but not to tip into recession. Official US growth figures still show impressive performance, with a 3.8 per cent annualised GDP rate in the second quarter – the highest within the G7. Contained inflation has enabled the central bank to lower interest rates for the first time this year in September, further underpinning economic stability.

Georgieva did caution that the full impact of tariffs has not yet materialised, with future risks including inflationary pressures and potential shifts in global trade flows. Margin compression may lead to higher consumer prices, which would have implications for both monetary policy and growth trajectories. Additional goods re-routed from the US could also prompt further rounds of tariffs elsewhere, disrupting the relative calm currently seen in world trade.

Despite these potential challenges, the majority of international trade continues to function within established rules. Georgieva urged policymakers worldwide to continue to safeguard trade as a key driver of global prosperity. The IMF is set to publish its latest World Economic Outlook next week, which will provide further insights into the enduring resilience and evolving risks facing the international economy.