OECD Slashes U.S. Growth Forecast: How Trump’s Tariffs Are Shaping the Global Economic Landscape

The retail scene in Times Square buzzes with life, with places like Old Navy and Gap drawing many shoppers. However, beneath this lively surface, big economic shifts are unfolding, largely influenced by U.S. tariff policies.

According to the Organisation for Economic Co-operation and Development (OECD), the growth forecasts for the U.S. economy have taken a significant hit. They’re now predicting a meager growth of just 1.6% for this year and 1.5% in 2026. This is a stark drop from earlier expectations of 2.2% for 2025. The uncertainty surrounding President Trump’s tariffs, alongside a decline in immigration and federal workforce size, has led to these lower forecasts.

The global economy is not faring much better. The OECD estimates that global GDP growth will slow from 3.3% in 2024 to just 2.9% this year and in 2026. The slowdown is primarily hitting the U.S., Canada, and Mexico, while other parts of the world are facing milder downturns.

Recent tariff changes have created a swirl of uncertainty. The U.S. Court of International Trade recently blocked Trump’s specific trade levies, only for an appeals court to reverse that decision. Additionally, Trump has hinted at doubling steel duties to 50%. These constant shifts lead to instability in both global markets and local economies.

Inflation, too, is on the rise. The OECD has adjusted its inflation forecast, stating that the higher trade costs from tariffs will contribute to this trend. For instance, inflation in G20 countries is now projected to be 3.6% in 2025, down slightly from an earlier forecast. But for the U.S., the prediction has gone up from 2.8% to 3.2%, with potential climbs towards 4% by the end of 2025.

This raises questions: How much do tariffs impact our everyday prices? Experts in economics suggest that the outcome depends significantly on how businesses respond and any countermeasures they may implement.

In summary, the economic landscape is shifting rapidly, influenced by tariffs and trade barriers. Understanding these changes can help us navigate the complexities of today’s economy. As we keep an eye on these developments, it’s crucial to be aware of how they might affect us all in the coming years. For more details, you can read the latest OECD report here.

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