Trade barriers imposed by both the United States and China reduced the volume of goods moving between the two economies, an IMF assessment found, though producers on each side offset some of that impact by rerouting shipments to alternative destinations, with Asian markets absorbing a notable share of the diverted trade.

Trade data published in the IMF's October 2026 World Economic Outlook showed that shipments from China to the United States contracted by 22 percent across the twelve months running from February 2025 through January 2026, while goods moving in the opposite direction — from the United States to China — recorded a steeper contraction of 25 percent over that same span. Weakening trade between the two economies shaved 3.3 percentage points off China's overall export growth while trimming 1.7 percentage points from the corresponding figure on the American side.

Sales flowing into outside markets held up for both nations, cushioning a notable share of the near-term blow. Gauged against the period before tariffs took effect, outbound goods from China flowing to non-US buyers ran 4.7 percentage points ahead of the established baseline by January 2026, while American merchandise heading to destinations outside China tracked 2.6 percentage points above its own prior trajectory. Trade volumes for both countries held within roughly a single percentage point of where they had been heading before the tariffs took effect, a result those adjustments helped bring about.

A fund report from the IMF traced the ways businesses rerouted their cargo flows in response to the tariff increases that took effect in 2025. Within a single year, goods targeted by American tariffs found new buyers elsewhere, with redirected export volumes covering the equivalent of 52 percent of the trade that had been placed at risk. Researchers placed that trade diversion figure at 39 percent once they stripped out the baseline growth that would have occurred in the absence of tariffs.

Shipments of American goods facing Chinese counter-tariffs posted more modest gains in third-country markets — rising by a volume equivalent to 17 percent of the trade at risk, with roughly 7 percent of that movement traceable to the tariff effect once underlying trends were stripped out. Prior to tariff implementation, the fund pointed to the asymmetry in trade exposure as a partial explanation: roughly 15 percent of Chinese export volume flowed toward the American market, while goods heading the other direction made up around 7 percent of total American export destinations.

Roughly half of all redirected trade found its way into Asian markets, with the European Union accounting for close to a fifth of the remainder. Portions of the total flowed to four other regions — the Middle East, Central Asia, Africa, and the Western Hemisphere — each receiving a lesser allocation. Shipments of power and industrial equipment drove a notable share of the uptick in goods flowing toward Asia, while automotive products accounted for a meaningful slice of trade rerouted through the Middle East and Central Asia.

According to the IMF's assessment, businesses across various sectors demonstrated an ability to reconfigure their supply and delivery operations in response to evolving trade constraints. The capacity to reroute exports elsewhere does not, the report cautioned, erase the lasting financial toll that trade protectionism tends to impose over time. Persistent trade restrictions, the report warned, threaten to push up operational expenses, force manufacturers to duplicate facilities across borders, and erode the efficiencies that interconnected global supply networks depend on.

Global trade volumes, according to IMF forecasts, are on course to ease from a 5 percent expansion rate in 2025 down to 4.6 percent the following year, with a modest partial recovery to 4.7 percent pencilled in for 2027. Among the findings, fresh bilateral and regional trade pacts — covering arrangements with India, the European Union, and the United Kingdom — were identified as avenues through which tariff obstacles could be reduced and supply chain durability strengthened.

Published each year, the IMF's World Economic Outlook maps out how forces such as trade tariffs, shifting commodity prices, and advances in technology are reshaping economies around the world. The October edition takes up three distinct subjects: curbs on international trade, ongoing conflict across the Middle East, and a broad surge of capital pouring into artificial intelligence ventures worldwide.