Trump Tariffs: Economic Growth Forecast Cut
- President Donald Trump's tariff policies are expected to trigger a more pronounced economic slowdown in the U.S.
- GDP growth to nearly halve, dropping from 2.8% in 2024 to 1.6% in 2025 and 1.5% in 2026.
- OECD Secretary-General Mathias Cormann emphasized the need for international cooperation.
The OECD warns that TrumpS tariffs threaten a U.S. economic slowdown, with GDP growth projected to nearly halve in 2025 and 2026. This deceleration, alongside anticipated global economic slowing, stems from rising trade costs linked to Trump’s import levies. The report highlights potential disruptions to supply chains and increased inflation due to the tariffs, creating uncertainty for business investment. Global growth is highly likely to dip below 3% between 2020 and 2026. the primary factor, as flagged by the OECD, points to trade costs triggered by the tariff policies as the leading cause of the deceleration. Learn about this and other essential national and global developments by visiting News Directory 3. Discover what’s next for the global economy amid these shifting trade dynamics.
Trump Tariffs Threaten Economic Slowdown and Inflation, OECD Warns
Updated June 03, 2025
President Donald Trump’s tariff policies are expected to trigger a more pronounced economic slowdown in the U.S. and worldwide, according to a recent report by the Organization for Economic Co-Operation and Advancement (OECD).The OECD’s analysis points to “rising trade costs” stemming from Trump’s import levies as the primary driver of this deceleration.
The organization projects U.S. GDP growth to nearly halve, dropping from 2.8% in 2024 to 1.6% in 2025 and 1.5% in 2026. Global growth is also anticipated to decline from 3.3% in 2024 to 2.9% in both 2025 and 2026,falling below the 3% threshold maintained as 2020.
OECD Secretary-General Mathias Cormann emphasized the need for international cooperation. “The global economy has shifted from a period of resilient growth and declining inflation to a more uncertain path,” Cormann said, urging governments to address global trading system issues through dialogue to preserve the benefits of rules-based trade.
The OECD warns that Trump’s tariffs and the uncertainty surrounding his economic policies could cause “significant disruptions” to global supply chains, still recovering from the COVID-19 pandemic. The report anticipates a ample slowdown in global trade growth over the next two years, further hindering business investment.
The future of these import taxes has been uncertain, marked by ongoing negotiations and legal challenges. A recent court order briefly struck down the levies before a stay allowed them to remain in place. Trump then announced plans to double tariffs on aluminum and steel imports, possibly escalating trade tensions.
The OECD suggests that increased trade costs from the tariff agenda could also fuel inflation,although weaker commodity prices might offset this impact.Inflation had decreased to 2.3% in April after peaking at 9.1% in 2022. However, some major retailers have already begun to raise prices, citing tariffs as a contributing factor.
Walmart, for instance, announced price increases in May, attributing them partly to import taxes, prompting Trump to suggest the company ”eat the tariffs.” Other businesses, including Target, have cited tariffs among various factors affecting their bottom lines, while companies like Subaru and Nike have not directly linked price changes to tariffs.
What’s next
The OECD’s report suggests a cautious outlook for the global economy, contingent on the evolution of trade policies and their impact on supply chains and inflation. Monitoring consumer confidence and business investment will be crucial in assessing the true extent of the slowdown.