How US tariff shift is shaping global economy – IMF report

The world economy is projected to slow from 3.3% in 2024 to 3.2% in 2025 and 3.1% in 2026.

This is according to the International Monetary Fund (IMF) World Economic Outlook (WEO) released in October 2025.

WEO indicated the impact of the US export tariff introduced by the Donald Trump administration early in the year on the projected global Gross Domestic Product.

Trump’s high export tariffs on certain countries posed economic uncertainties, lowering the projection to 2.8%.

“The April 2025 World Economic Outlook (WEO) revised the 2025 global growth projection downward by 0.5% points to 2.8%,” read the WEO report in part.

However, in July 2025, when the US held negotiations with various countries and provided multiple exemptions, with the tariff impact and uncertainties receding, WEO projected the economy to grow at 3%.

What are the new US tariffs after negotiations?

The US revised tariffs on various countries in October 2025 to moderate, with China’s dropping from a high of 65%in April to 45%.

India now has a high export tariff of 35% to access the US market, compared to the 25% that was imposed in April 2025.

Other countries whose tariff was revised are Brazil (30%), Turkey (20%), Japan (15% down from 25%), and Sub-Saharan Africa, including Kenya (15%), the UK (10%) and Mexico (10%).

Economic projection for advanced economies

Meanwhile, advanced economies are forecasted to grow about 1.5% in 2025–26, with the United States slowing to 2%.

Emerging markets and developing economies are projected to moderate to just above 4%. Kenya, which falls into this category, is projected to record real GDP growth of 4.8% in 2025 and 4.9% in 2026.

Global inflation is expected to decline to 4.2% in 2025 and to 3.7% in 2026, with notable variation: above-target inflation in the United States—with risks tilted to the upside—and subdued inflation in much of the rest of the world.

The report further showed that World trade volume is forecast to grow at an average rate of 2.9% in 2025–26—boosted by front-loading in 2025, yet still much slower than the 3.5% growth rate in 2024—with persistent trade fragmentation limiting gains.