IMF: Global & Australian Economy Resilient to Tariffs
australia’s Trade Relationship with the US under Trump: A Shifting Landscape
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Australia may no longer be Trump’s least badly treated friend. Under Donald Trump’s tariff program, Australia appeared to be one of America’s least badly treated friends. But, without a new deal, the president’s latest idea would change that.
IMF Adjusts Global Growth Forecasts Amid Tariff Uncertainty
The International Monetary Fund (IMF) has revised its global growth projections, noting a meaningful shift in the effective tariff rate impacting the US economy. According to a recent report, “The US effective tariff rate underlying the projections is 17.3 per cent,compared with 24.4 per cent in the April reference forecast.”
This adjustment comes after a period where the US implemented substantial tariffs on major trading partners and a baseline tariff of 10% on most other economies, including Australia. The April forecast was made shortly after President trump unveiled his “liberation day” tariffs, which imposed heavy duties on several of America’s largest trading partners.
Trump’s Proposed Tariff Hike and its Implications
Adding to the evolving trade dynamics, President trump recently indicated a potential increase in the baseline tariff rate from 10% to a range of 15% to 20%. This proposed change could substantially alter Australia’s position as one of the less adversely affected nations under Trump’s trade policies.
The IMF report also highlighted that inflation in the US has “ticked up” as a outcome of these tariffs and a weakening US dollar.
China’s Growth Surges, Driven by Tariff Reductions
In contrast to the potential impact on Australia, China’s economic outlook has seen a notable upgrade. The IMF now expects China, Australia’s largest trading partner, to grow at 4.8% in 2025, an increase of 0.8% from its April prediction.
This upward revision is attributed to “stronger-than-expected activity in the first half of 2025 and the significant reduction in US-china tariffs,” the report stated. This progress underscores the complex interplay between trade policies and economic performance on a global scale.
India’s Steady Economic Trajectory
Simultaneously occurring, another major emerging market, India, is projected to maintain a steady growth rate of 6.4% for both the current year and the next. this forecast indicates a consistent economic trajectory for India amidst the fluctuating global trade habitat.