The Organisation for Economic Co-operation and Development, or OECD, has made some surprising news with its new report. They have lowered their forecast for economic growth both in the United States and around the world. This change comes as new trade tariffs proposed by President Trump are making economic experts quite concerned about how they could affect our future.
What the OECD Says
The OECD has revised its predictions, saying that global growth will now be slower than they originally thought. For example, they expect global growth to be around 3.1% in 2025 and 3.0% in 2026. This is down from their previous estimates which were even higher!
Impact on the U.S. Economy
In the United States, the growth forecast is now at 2.2% for 2025 and even lower at 1.6% for 2026. These changes reflect the potential consequences of President Trump’s proposed tariffs, which are higher taxes on imported goods. The idea is that these tariffs might discourage other countries from trading with the U.S. and could potentially lead to less spending and investment.
Trade Barriers and Their Consequences
As trade barriers, like tariffs, increase, it often makes it harder for businesses and countries to trade efficiently. This uncertainty can lead to companies hesitating to invest or expand, which can slow down the economy even more. According to the OECD, the overall uncertainty surrounding these trade policies could really shake things up for businesses and consumers.
Countries Affected
The OECD report doesn’t just look at the U.S. They also mention that other countries like Mexico and Canada are feeling the heat too. For instance, Mexico could potentially slip into recession because of these trade policies. Canada’s growth projections are also seeing significant downsides, which shows how interconnected the global economy really is.
- The U.S. Growth Forecast: 2.2% in 2025, 1.6% in 2026
- Global Growth Forecast: 3.1% in 2025, 3.0% in 2026
- Mexico risks going into recession due to trade challenges
- Canada also expected to see reduced growth
Inflation Worries
Another big concern the OECD highlighted is inflation—the general increase in prices of goods and services. As trade barriers rise, so do prices. They predict that countries in the G20 group will experience an average inflation rate of 3.8% in 2025 and 3.2% in 2026. This means the cost of living could rise significantly for people around the world, which is really worrying news for everyone.
Looking Ahead
The OECD is warning that if trade tensions escalate even further, we could see a drop in global growth and an increase in inflation, which is something that nobody wants to deal with. Their report suggests that the current set of tariffs implemented under Trump’s administration is already influencing these projections. As we look to the future, it appears that global growth could be at risk if trade relations don’t improve.
