The U.S. dollar has depreciated by roughly 8% since January, intensifying the global impact of recent tariff measures and shifting competitiveness across major economies, according to the International Monetary Fund.

In its July 2025 World Economic Outlook Update, the IMF noted that the currency shift stands in contrast to previous episodes where countries imposing tariffs typically saw their currencies appreciate, helping absorb the shock. This time, however, the opposite has occurred.

“The dollar depreciation has amplified the impact of the tariff shock on other countries’ competitiveness,” said Pierre-Olivier Gourinchas, IMF’s Chief Economist. “With a stable value relative to the U.S. dollar, the Chinese renminbi has tracked the dollar, while the euro has appreciated significantly.”

The depreciation comes amid easing inflation pressures in the United States and shifting expectations about the Federal Reserve’s policy stance. The IMF said the dollar’s fall has contributed to looser global financial conditions in recent months, alongside selective tariff rollbacks and fiscal support in some economies.

While these developments have modestly improved the growth outlook—raising global GDP projections to 3.0% in 2025—the IMF warned that the gains remain fragile. Volatile currency movements, persistent inflation risks, and renewed trade tensions could all undermine recovery efforts.

The Fund emphasized the importance of credible and consistent policies to sustain financial stability, including preserving central bank independence, restoring fiscal space, and rebuilding trust in global trade rules.