The US has extended the start date for reciprocal tariffs to Aug. 1 and signaled looming sectoral tariffs, adding to global trade uncertainty and downside growth risks, though fiscal and monetary support may help offset some of the impact, according to National Australia Bank's (NAB) report on Thursday.

NAB added that with trans-shipment concerns raising tensions with China and tariff outcomes still unclear, trade policy uncertainty remains elevated, posing downside risks to the global outlook despite muted market reaction so far.

Fiscal and monetary policies are shifting to support growth, with US stimulus from the one big beautiful bill act set to begin later this year and the Federal Reserve expected to cut rates by year-end as it weighs tariff impacts on inflation and jobs, the report said.

US economic growth is expected to remain soft in the second half as tariff effects take hold, with recovery likely in 2026 as fiscal and monetary support builds; other economies like the Eurozone, UK, and Canada also face subdued near-term growth after front-loading activity ahead of tariffs.

China's current year growth forecast has been revised up to 4.8% from 4.3%, reflecting stronger-than-expected second quarter exports, while the 2026 outlook remains unchanged at 4%, the report added.

Global growth forecasts have been slightly raised, with this year expected to reach 3.1%, up from 3%, driven by China's resilience.

The 2026 forecast has increased to 2.9% from 2.8%, and 2027 is projected to grow by 3%, although gains remain limited by China's ongoing structural slowdown.