How tariffs will continue reshaping the global economy in 2026

"While supporters argue that tariffs are reviving domestic industry, lifting wages and restoring economic sovereignty, critics remain unconvinced. What is no longer in dispute, however, is that Trump's tariff regime has already reshaped the global economy, and will continue to do so well into 2026. According to the International Monetary Fund (IMF), the cumulative impact of tariff measures is one of the key reasons global growth is now forecast to slow to 3.1 per cent in 2026, down from a pre-Covid average of 3.7 per cent."

"Maurice Obstfeld, a former IMF chief economist and now at the Peterson Institute for International Economics, argues that the damage from tariffs has been contained largely because most countries avoided aggressive retaliation. China was the notable exception, and even there, the US rapidly softened its stance following forceful counter-measures from Beijing. "We avoided a trade disaster," Obstfeld says. "But we still ended up with more trade restrictions than when Trump returned to office.""

Tariffs are a central element of US economic policy and are credited by supporters with reviving domestic industry, lifting wages, and restoring economic sovereignty. Critics remain unconvinced, but the tariff regime has already altered global economic dynamics and will continue to do so into 2026. The IMF attributes cumulative tariff measures as a key reason global growth is forecast to slow to 3.1 percent in 2026, down from a pre-Covid average of 3.7 percent. Damage from tariffs has been contained largely because most countries avoided aggressive retaliation, though China mounted notable counter-measures. Multiple rounds of talks have left US-China tariffs and trade barriers higher than in recent history, creating lasting friction across global supply chains and gradually increasing costs and uncertainty for business investment planning.

Read at Business Matters