Topline
The global economic growth is set to face a significant slowdown, with the U.S. economy being among the hardest hit, due to increased uncertainty around international trade over President Donald Trump’s sweeping tariffs, the Organization for Economic Cooperation and Development warned Tuesday.
President Donald Trump’s sweeping tariffs have begun slowing down the global economy, with the U.S. … More
Key Facts
The OECD, an intergovernmental organization that includes 38 of the world’s top economies, released its latest economic outlook report, which projects global economic growth will drop from 3.3% in 2024 to 2.9% in 2025 and 2026.
This is a downward revision from the OECD’s earlier projection of 3.1% growth in 2025 and 3.0% in 2026, released in March—which itself was a significant downward revision from December’s forecasts.
The second downward revision of growth forecasts is a result of “rising trade costs” due to Trump’s sweeping tariffs, which the OECD says are “likely to fuel inflation.”
The U.S. economy, in particular, is set to be among the hardest hit, with growth dropping from 2.8% in 2024 to 1.6% and 1.5% respectively in 2025 and 2026.
Apart from the U.S., the OECD projects that most of the slowdown will be concentrated among Canada, Mexico, and China.
China’s growth is projected to slow from 5% in 2024 to 4.3% in 2026, while Canadian and Mexican economic growth will drop from 1.5% for both in 2024 to 1.1% in 2025.
Could A Tariff War Further Impact Growth?
The OECD warned that further increases in tariffs by the U.S. government and retaliatory measures by trading partners could “intensify the growth slowdown and trigger significant disruptions in cross-border supply chains.” The report notes that more tariffs and retaliation could further roil financial markets, “prolong policy uncertainty” and “weaken global demand for many key commodities,” among other things. For example, the report says if the U.S. raised tariffs further by an additional 10% on all other countries, global output could drop by 0.3% within two years, while American economic output would fall by 0.6%.
Tangent
President Donald Trump has not commented on the OECD’s latest projections, but in a post on his Truth Social platform early on Tuesday, he wrote: “Because of Tariffs, our Economy is BOOMING!” The president did not cite any data to back his statement. In the first quarter of 2025, the U.S. reported negative GDP growth for the first time since 2022.
Crucial Quote
“The global economy has shifted from a period of resilient growth and declining inflation to a more uncertain path,” OECD Secretary-General Mathias Cormann said. “Governments need to engage with each other to address any issues in the global trading system positively and constructively through dialogue.”
Big Number
3.2%. That is the projected headline inflation rate in the U.S. for 2025, according to the OECD report, up from 2.5% in 2024. The forecast for 2026 is 2.8%, as the report notes that inflation may “prove more persistent than expected.”
Further Reading
How Close Is The U.S. To A Recession? Here’s What Key Indicators Say. (Forbes)
