Trade War Slows Global Growth: OECD Report
- The Organisation for Economic Co-operation and Growth (OECD) has lowered its annual global growth forecast, citing the impact of trade tariffs, notably those imposed by former U.S.
- The revised forecast, released Tuesday, marks a downturn from the OECD's March projections of 3.1% for 2025 and 3.0% for 2026.
- Alvaro pereira,OECD chief economist,emphasized the importance of international cooperation.
Teh OECD paints a sobering picture: Trade tariffs are significantly slowing global economic growth. the latest report reveals a cut in the 2025 global growth forecast to 2.9% due to rising trade barriers,particularly those initiated by the former U.S. President. The U.S. is expected to see a slowdown to 1.6% growth in 2025, with the OECD warning of negative impacts on global incomes and jobs. This shift underscores the critical need for international cooperation to mitigate the repercussions of escalating trade wars, as warned in the latest OECD report. news Directory 3 offers insights on the ongoing discussions between U.S. and EU trade negotiators. See how these key players plan to tackle trade tensions and stabilize the global economy. discover what’s next …
OECD Cuts Global Growth Forecast Amid Trade Tariff Worries
Updated June 3, 2025
The OECD warned that the global economic outlook “is becoming increasingly challenging” amid Trump’s tariff blitz.
The Organisation for Economic Co-operation and Growth (OECD) has lowered its annual global growth forecast, citing the impact of trade tariffs, notably those imposed by former U.S. President Donald Trump. The OECD now projects a “modest” global expansion of 2.9% for both 2025 and 2026, a decrease from the 3.3% growth seen the previous year.
The revised forecast, released Tuesday, marks a downturn from the OECD’s March projections of 3.1% for 2025 and 3.0% for 2026. The organization,comprised of 38 mostly wealthy nations,pointed to “considerable increases” in trade barriers,tighter financial conditions,and weakened business and consumer confidence as factors contributing to the less optimistic outlook for international trade.
Alvaro pereira,OECD chief economist,emphasized the importance of international cooperation. “For everyone, including the United States, the best option is that countries sit down and get an agreement,” Pereira told AFP, adding that, “Avoiding further trade fragmentation is absolutely key in the next few months and years.”
The report indicates a notable slowdown for the U.S. economy, now expected to grow by only 1.6% this year,down from the previous forecast of 2.2%. Growth is projected to further decelerate to 1.5% in 2026. The OECD attributes this to increased tariff rates on imports and retaliatory measures from trading partners. The effective tariff rate on U.S. merchandise imports has risen sharply, reaching its highest level since 1938.
While the OECD slightly reduced its growth forecast for China to 4.7% and Japan to 0.7%, the outlook for the eurozone remains at 1% growth. The organization cautioned that further increases in protectionism and trade policy uncertainty could further dampen global growth and fuel inflation.
What’s next
Trade negotiators from the U.S. and EU are expected to discuss trade issues at the OECD ministerial meeting in Paris. The Group of Seven advanced economies is also holding a meeting focused on trade, seeking avenues to de-escalate trade tensions and foster greater economic stability.