How are tariffs affecting the US and global economies?

Trump was accused of throwing the global economy into turmoil when he announced the first tariffs of his second presidential term. Although financial markets have since largely recovered, in October the International Monetary Fund (IMF) said the overall picture remained volatile, and that US tariffs were having a negative effect.

It forecast global growth of 3.2% in 2025, and 3.1% in 2026. That was a slight increase from its July predictions, but still below the 3.3% it had projected for both years before Trump’s measures were announced. It thinks the US economy will grow by 2% in 2025, and 2.1% in 2026. That’s down from the 2.8% growth recorded in 2024, but still the fastest among the world’s most advanced economies. The most recent US figures show the economy actually grew at an annual rate of 3.8% between April and June 2025, up from an earlier estimate of 3.3%.

US tariff revenues have increased sharply. Official US data showed they were $28bn in June 2025, triple the monthly total in 2024. The Congressional Budget Office, an independent watchdog, estimated that the tariffs imposed between 6 January and 19 August 2025 would reduce government borrowing in the 10 years to 2035 by $3.3tn. However, it previously suggested tariffs would also shrink the overall size of the US economy.

Are prices going up for US consumers?
Shoppers have already seen price rises for some products. US inflation was 3% in the 12 months to September, having gone up since April, when it stood at 2.4%. The cost of groceries was up 2.7% over the period. Beef and veal were up more than 14%, while coffee surged by nearly 19%. Prices for furniture, which is also heavily imported, went up by almost 4%. That increase did not reflect the 50% tariffs on some furniture which began in October.

Many firms have warned they will pass on the cost of tariffs to customers, including Target, Walmart and Adidas. The cost of goods manufactured in the US using imported components is also expected to rise. For example, car parts typically cross the US, Mexican and Canadian borders multiple times before a vehicle is completely assembled. Despite the price rises and continuing uncertainty about the impact of tariffs, the latest official figures show that consumer spending increased by 2.5% in the year to the end of June, up from a previous estimate of 1.6%. However, it is not yet clear whether tariffs have since had an impact.