The tariff policies initiated by President Donald Trump are set to have negative impacts on both the United States and global economies, according to a new warning from the Organization for Economic Co-operation and Development (OECD). The OECD has significantly lowered its global economic growth projections, now anticipating a decline from 3.3% in 2024 to 2.9% in both 2025 and 2026, a direct consequence of the escalating trade war.
The OECD report directly links this dim forecast to the “challenging and uncertain environment” created by Trump’s trade policies. It warns that “weakened economic prospects will be felt around the world, with almost no exception,” leading to “lower growth and less trade [that] will hit incomes and slow job growth.” The United States, alongside Canada, Mexico, and China, is specifically identified as a major contributor to this anticipated global economic contraction.
Furthermore, the OECD highlights that “protectionism” will put pressure on inflation, meaning costs for goods and services will rise. This directly challenges Trump’s stated goal of boosting domestic production, suggesting that his policies will likely lead to higher prices for American consumers. The report also warns that these tariffs pose an added risk for developing nations, especially those with high levels of government debt.
To counter these economic headwinds, the OECD advises central banks to remain vigilant regarding inflation. The Bank of Canada, for instance, is already monitoring the situation. The report also emphasizes the crucial need for increased investment to revive economies and strengthen public finances, a task made more difficult for governments already grappling with significant debt, including potentially the U.S. itself.