Markets Are About to Feel the Pain of Trump’s Tariffs—Here’s the Timeline

As the International Monetary Fund (IMF) prepares to release updated global growth forecasts this week, early indicators suggest that the disruptive effects of U.S. President Donald Trump’s recently reimposed global tariffs are beginning to ripple through the world economy. 

While these tariffs are currently only partially in effect, economists, central bankers, and financial markets are bracing for their delayed but inevitable impact.

Economic Forecasts Downgraded as Tariff Effects Begin to Surface

The IMF’s revised outlook, due Tuesday, is expected to show significant markdowns to global growth projections, underscoring growing concern over escalating trade tensions. 

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IMF Managing Director Kristalina Georgieva confirmed that while a recession is not anticipated, notable downgrades in GDP forecasts will be paired with upward revisions to inflation estimates in some regions.

“Protracted high uncertainty raises the risk of financial-market stress,” Georgieva cautioned ahead of the release. 

That uncertainty stems in large part from Trump’s broad and aggressive use of tariffs—initiated in early April—which are aimed at rewiring global trade relationships. These policies are starting to shape economic sentiment and output.

On Wednesday, purchasing manager indexes (PMIs) from major economies—including the U.S., Japan, and several European countries—will offer the first comprehensive data on manufacturing and services activity since the tariffs were introduced. 

These indexes, along with a wave of other business surveys and economic reports, will help policy leaders gauge how deeply tariffs are beginning to affect both supply chains and demand dynamics.

Early Signs of Disruption Emerging Across Regions

Early signs are emerging across the globe. In the U.S., consumer sentiment has shown signs of deterioration, with recent University of Michigan surveys reflecting growing anxiety over trade policy and its inflationary consequences. 

Durable goods orders and home sales data later this week may further illustrate weakening business investment and consumer activity.

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Meanwhile, the Federal Reserve’s Beige Book, scheduled for release Wednesday, will provide anecdotal evidence from regional businesses on how the tariffs are influencing decision-making and hiring. With interest rates still above 6.5% and inflation concerns mounting, the Fed remains in a holding pattern—waiting, as Chair Jerome Powell put it, for “greater clarity.”

In Europe, upcoming PMI data will be a key barometer of the toll tariffs are taking on export-heavy economies such as Germany and France. A closely watched Ifo business confidence index in Germany, and France’s business sentiment report, are both due later in the week. 

ECB President Christine Lagarde recently admitted that it’s unclear whether economic uncertainty has peaked, and surveys this week will likely influence any future monetary policy decisions.

Asia is also beginning to feel the pressure. While China’s growth has recently outpaced expectations, neighboring economies such as Indonesia, Taiwan, and Japan are facing fresh trade frictions. 

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Japan is now exploring car safety standard revisions as part of its negotiations with Washington to ease U.S. tariffs. South Korea, too, is ramping up diplomatic efforts to mitigate the impact.

Global Leaders Face Tough Choices at IMF and G20 Meetings

This week’s IMF and G20 meetings in Washington provide a crucial stage for global leaders to confront these challenges. With central bankers and finance ministers gathered just blocks from the White House, the political and economic stakes are high. There is growing urgency to recalibrate trade relations before economic drag worsens.

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Georgieva emphasized that cooperation, not division, must guide the international response. “We need a more resilient world economy, not a drift to division,” she said. Yet the path forward remains fraught, as political considerations—from Trump’s potential presidential bid to elections in Canada and growing unease in Latin America—complicate coordination.

Adding to the uncertainty are questions about the U.S. Federal Reserve’s independence. Trump has reignited speculation about influencing Fed policy, a move that drew public concern from Chicago Fed President Austan Goolsbee, who warned against compromising the central bank’s autonomy.

A Delayed Shock That Could Outpace Early Forecasts

Historically, the IMF has underestimated the short-term consequences of major economic disruptions. According to Bloomberg Economics, in four past crises, the Fund understated the immediate impact on global growth by an average of 0.5 percentage points. If that pattern holds, the eventual damage from the tariffs could be more severe than initial forecasts suggest.

With inflation rising in multiple regions and global supply chains still recovering from post-pandemic shocks, the tariffs may amplify volatility in markets already on edge. While some policymakers hope that current forums will offer a path to de-escalation, investors and economists are bracing for a turbulent period ahead.