United States: Tariffs Less Severe than Estimated, but Their Impact Will Eventually Sting

The global economy—and particularly the US economy—has shown greater resilience than initially expected in the face of renewed protectionism since President Trump’s arrival. One key factor behind this resilience is that the negative impact of tariffs has been more modest than anticipated, in part because the tariffs themselves have been less severe than originally estimated. That said, while our real GDP growth forecasts have been revised upward somewhat since the spring, risks remain. The uncertainty stemming from the Trump administration’s protectionist policies continues to cast a shadow over the economic outlook and could still lead to unexpected developments.