CNN
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President Donald Trump’s tariff policies have slowed economic growth in the US and around the world, while also raising prices again and creating toxic stews for the global economy that will get worse as tensions escalate, the organisation for economic cooperation and development said Monday.
The quarterly report is the first drastic attempt by a world economist to document and predict damages from Trump’s policies to the United States and its trading partners. The OECD report shows that the US market has been signaling for weeks. As they quickly fell into the realm of correction, Trump’s tariffs can suffocate the global economy and rekindle inflation during periods of uncertainty.
The massive new import taxes on various goods from different countries imposed by the Trump administration have been subject to immediate retaliation from America’s biggest trading partners. The new tariffs and Trump threats and direct taxation threats have led to increased uncertainty for businesses around the world, preventing them from fostering economic growth, according to the OECD. Meanwhile, the fear of rebounding inflation from tariffs has reduced consumer sentiment and spending, cutting off fuel for the US and the global economy.
“If the announced trade policy measures continue as envisaged, as expected in the forecast, new bilateral tariff charges will increase revenues imposed on the government, but will cause global activity, revenues and regular tax revenue,” the OECD said. “They will also add trade costs and increase the prices of imported final goods imported for consumers and mid-term inputs for businesses.”
A group of most 38 wealthy countries made new economic forecasts that were significantly worse than previous forecasts. The OECD predicted that US economic growth would be dramatically slower and faster to 2.2% this year and the following year in 2025, and to just 1.6% in 2026. The US economy grew at a rate of 2.8% last year. The global economy is expected to increase by 3.1% this year and 3% next year, down from 3.2% growth in 2024.
Meanwhile, the OECD predicted that US inflation will recover this year. Prices are expected to rise 2.8% in 2025, up from 2.5% last year. They continue to rise in 2026, with an OECD forecast of 2.6%.
Both growth and inflation forecasts are worse than previous quarterly reports. The OECD previously predicted that US inflation would be at just 2.1% this year, while US economic growth would be at 2.4% in 2025. Global economic growth was expected to increase to 3.3% this year.
But Canada, particularly Mexico, will be significantly worse than the US in a budding trade war. Trump has pledged 25% onboard tariffs on his US neighbors and two of its three biggest trading partners.
The OECD believes Canada’s economic growth is only 0.7% this year, far less than forecast for growth in December’s report. Furthermore, Mexico’s economy is expected to shrink by 1.3% this year and 0.6% in 2026. This is a dramatic shift from the previous report, which projected an expansion of 1.2% in 2025 and a growth of 1.6% next year.
But the OECD predicts that China, another direct target of Trump’s tariff policy, will prove to be more insulated than Mexico and Canada. For example, the government has issued a broad “special action plan” to promote domestic spending to combat the economic impact of Trump’s tariffs.
The central bank will cut out their work for them. After the inflation crisis subsides, many people around the world have cut interest rates to fuel growth, but the OECD believes that inflation, which rekinds tariffs, means central banks must maintain interest rates longer, causing long-term pain for businesses and consumers.
