Global economy shrugs off US tariff shock, tech spending does heavy lifting
- Reference: 1768908377
- News link: https://www.theregister.co.uk/2026/01/20/global_economy_shrugs_off_us/
- Source link:
[2]According to the IMF , the damage from higher US tariffs has so far been limited, with companies finding ways around the disruption by reshuffling supply chains and exports. The latest forecast is marginally stronger than in the autumn, suggesting the tariff hit has been more of a drag than a derailment.
"Remarkably, current projections are broadly unchanged from a year earlier, as the global economy shakes off the immediate impact of the tariff shock," it said.
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According to the IMF, the key factor behind that resilience is a surge in technology-driven investment, particularly in the US, with AI playing a central role. In the States, IT spending now takes up a bigger slice of the economy than at any point since the early 2000s, a shift the IMF links to Washington's ability to shrug off trade headwinds better than most of its peers. On that basis, the Fund expects US growth to hit 2.4 percent in 2026, comfortably ahead of other advanced economies.
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Europe, by contrast, is stuck in lower gear. The IMF expects Germany to grow by 1.1 percent in 2026, France by 1.0 percent, and the UK by 1.3 percent. While technology investment is helping prop up global growth, the Fund says the benefits are heavily skewed toward the US, leaving Europe with a more modest outlook.
Elsewhere, the picture is patchy. China is forecast to grow by 4.5 percent in 2026, while Japan barely scrapes 0.7 percent. India remains the standout at 6.4 percent, with Brazil at 1.6 percent, Saudi Arabia and Nigeria around 4.5 percent, and Russia trailing on 0.8 percent.
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The IMF says this bout of growth has less to do with consumers spending freely and more to do with money flowing into new technologies. That has softened the hit from tariffs, but it also leaves growth resting on a narrower base, with AI-heavy sectors carrying much of the load.
[7]US punishes China's 'dominance' of legacy chips with zero percent tariffs
[8]US freezes $42B trade pact with UK over digital tax row
[9]EU probes Meta after WhatsApp kicked rival AIs off platform
[10]Canada ups its European Space Agency bet 10x with $376M
The IMF also flags the risk on the other side of the bet. If the promised AI productivity gains fail to materialize, or if financing tightens, the same concentration that has up to now supported growth could become a problem. In that case, the Fund warns, a slowdown in tech investment would not stay contained for long.
"The current tech boom raises important upside and downside risks for the global economy," the IMF said. "On the upside, AI could start to deliver on its productivity promises, raising US and global activity by 0.3 percent this year, relative to the baseline. On the downside, AI firms could fail to deliver earnings commensurate with their lofty valuations, and investor sentiment could sour."
For now, the IMF thinks the global economy is still moving in the right direction, despite trade friction and tariff threats. Growth is being carried less by trade and more by investment, especially in technology. That has kept the numbers ticking over, but it also means the margin for error is thinner than it looks. ®
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[1] https://www.theregister.com/2025/09/17/tariffs_us_pc_market/
[2] https://www.imf.org/en/blogs/articles/2026/01/19/global-economy-shakes-off-tariff-shock-amid-tech-driven-boom
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/aiml&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2aW-0wqjWe42KKeGUy_8UGQAAAY8&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/aiml&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aW-0wqjWe42KKeGUy_8UGQAAAY8&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/aiml&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33aW-0wqjWe42KKeGUy_8UGQAAAY8&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/aiml&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aW-0wqjWe42KKeGUy_8UGQAAAY8&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[7] https://www.theregister.com/2025/12/24/us_china_chip_tariffs/
[8] https://www.theregister.com/2025/12/16/us_uk_trade_deal/
[9] https://www.theregister.com/2025/12/04/eu_probes_meta_whatsapp_ai/
[10] https://www.theregister.com/2025/11/19/canada_european_space_agency/
[11] https://whitepapers.theregister.com/
This mostly proves that GDP is a very poor measure of economic success.
the 2.4% growth for the USA will come crashing down
as basically it's all 'AI' investment and when that bubble bursts the tariffs will hit home probably pushing it into negative numbers
Re: the 2.4% growth for the USA will come crashing down
@Darkedge
"as basically it's all 'AI' investment and when that bubble bursts the tariffs will hit home probably pushing it into negative numbers"
Along with the rest of us. Germany is already panicking due to their suicidal energy policies and needing to contribute to Europes defence which pretty much takes the EU with it. I assume Japan will be impacted by the tensions around China and here in the UK has been in managed decline until this government who are happy to drive us full force into decline.
Considering the financial incontinence of our governments I suspect we are all in for a rough ride at some point soon.
Re: the 2.4% growth for the USA will come crashing down
Still predicting the cliff collapse that justified us jumping off the cliff with Brexit.
Yes, sure. Going to happen. Any day now.
Re: the 2.4% growth for the USA will come crashing down
@Doctor Syntax
"Still predicting the cliff collapse that justified us jumping off the cliff with Brexit."
We have already seen those thanks. Nothing to do with brexit at all. I am sorry to see you are still butthurt we left the little club. Maybe you can get a cream for that.
I was making what should be the clear observation that it isnt just the US hanging on precariously and we shouldnt assume the problem is only American. But I am sure your world stopped at brexit and nothing else could possibly be happening
" The IMF also flags the risk on the other side of the bet. "
That's a big risk, especially if EU countries and the UK start dumping US bonds in response to the latest tariff threats. The IMF probably hasn't had time to factor this in.
Maybe that will be the pin that pops the AI bubble.
Personal opinion
As a novice investor who has done reasonably ok - and someone with several decades of tech sector experience - I'll say this. I have approximately 2-3% of my portfolio invested in AI and even that seems a bit much.
Might I miss out on big returns? Yes.
Do I care? For once, absolutely not.
I think to invest you have to believe quite strongly that what you're investing in is worth more than the paper it's printed on. Believing in it with some conviction is essential. I would describe myself as someone in the "medium risk" profile (not that that's really a thing. I mean somewhere between super cautious and moderately adventurous, erring on the cautious side).
AI has a few limited uses and it's really only a matter of time before world + dog accepts we've probably peaked.
With tan-tastic buffoon Trump thrown into the mix I feel it's better to be somewhat cautious.
Feel free to disagree. The title says it all. Each to their own.
Re: Personal opinion
>> AI has a few limited uses and it's really only a matter of time before world + dog accepts we've probably peaked.
I don't if you've seen the Google Elephant/Watermelon advert. That is designed and supposed to get to buy a subscription. I have very limited need for elephants made from watermelons.
I don't doubt that 'AI' has some uses, but I'm not sure what.
Trick
Most people believe that US citizens pay the tariffs, if their company ships orders with DAP (where customer pays any duty/tax).
That was sort of true, but many carriers changed their T&C and now once the US customer doesn't pay duty/tax, it is all charged to sender.
So depending how busy they are, the customs might release shipment without payment and that's how Murica steals money from overseas business.
Re: Trick
many carriers changed their T&C and now once the US customer doesn't pay duty/tax, it is all charged to sender.
Citation needed.
That's not been my experience and, if some carrier tried that shit, I would choose some other carrier, simply not ship to America, or ship via a third-country, which already helps many reduce tariff impact.
Re: Trick
I am in the EU, and for years, when buying from fex AliE or (until ~1 year ago) Amazon.com, VAT and duties are included in the price and collected by the seller, and payment and paperwork is handled by the shipper.
So no, the seller/exporter does not pay VAT and duties, it handles it for the buyer/importer to keep shipping expedient.
Re: Trick
Yes, DDP could be a solution, but if your product has a longer lead time it can get ugly.
You charge customer the current tariff and say next weekend Krasnov has a fit and imposes 200% tariff when your shipment is already in flight, your product will effectively be stolen and you'll pay for it.
Sure, you can have in T&C that customer should pay additional money if tariff changes or something like that, but good luck enforcing it.
I know one person who became homeless and bankrupt because of this.
Re: Trick
For example see FedEx https://www.fedex.com/en-gb/conditions-of-carriage/jan-2026.html#billing Clause 6.6
All carriers now do this.
simply not ship to America,
Brilliant solution. One of those if you are homeless, just buy a house.
Re: Trick
Why would anyone ship to the US if they risk losing?
All taxes fall on the buyer sooner are later.
Re: Trick
So presumably you think this story is bogus?
https://www.bbc.co.uk/news/articles/cjdjrnzj95zo
Re: Trick
Which the seller/sender promptly rolls into the price on the next item they send to the USA. Trust me, only the buyer is going to pay OrangeBaby's Tariffs, and since they are all import tariffs that means US residents. Customs might get away with that "trick" for a few items but pretty soon the sellers are going to either raise their prices or stop sending to the USA.
A few years ago the idiot UK government started requiring overseas companies to pay the import duties on sales under £135 and the result was that most small overseas companies simply refused to send to the UK. Before that I used to buy regularly from a small business in the US that supplied what I needed all from one business, but afterwards I had to source it all locally.
As for the Tangerine Muppets latest threats of tariffs, bring them on. The rest of the world is now 100% sick of his bully-boy tactics and bored of pandering to a spoilt narcissist. Even if our governments do nothing many people I know are now actively seeking non-US products, even if it costs them more. Imagine if the rest of the world starts doing what Canada has been doing since his tariffs. If the USA wants isolation, the world will give it to them. No doubt you can take Greenland by force, but you will crash your economy and effectively secede from NATO, and all because the brat you elected threw a temper tantrum because somebody dared to not give him what he wanted.
Re: Trick
Which the seller/sender promptly rolls into the price on the next item they send to the USA.
You ship the product on Friday, during weekend Krasnov has a fit and slaps 200% tariff. You call the carrier, they are busy, whatever. Shipment gets released, you pay 200%.
Re: Trick
Good luck making me pay. Not in US. Not going to go there.
Re: Trick
"Even if our governments do nothing many people I know are now actively seeking non-US products, even if it costs them more."
This is going to be Trump's legacy to the US economy long after he's gone. It's no longer able to be seen as a reliable part of a supply chain.
Re: Trick
"Even if our governments do nothing many people I know are now actively seeking non-US products, even if it costs them more."
Canada has shown the way, destocking some US products (eg US alcohol sales to Canada have been decimated), and improving links with other countries for alternative supplies.
Other consumers and countries will follow.
The real state of the UK economy
>> the UK by 1.3 percent
1.3 % is <0 in real terms due to inflation. The financial sector, good ad creating impossibly large numbers from thin air, is the basis for this 'growth'.
One thing that is not clear in this report is that China's growth is despite US tariffs - it has successfully found other markets as well as developing further at home. The USA's ill-considered and conceited attempt to crush China has come to nought.