U.S. and Global Economic Outlooks Cut by OECD as Trump’s Trade Tariffs Weigh on Growth

• Both U.S. and global economic growth is set to be lower than previously projected as President Donald Trump’s proposed tariffs on goods imported to the U.S. weigh on growth, according to the latest estimates from the Organisation for Economic Co-operation and Development.
• “Global GDP growth is projected to moderate from 3.2% in 2024, to 3.1% in 2025 and 3.0% in 2026, with higher trade barriers in several G20 economies and increased geopolitical and policy uncertainty weighing on investment and household spending,” the OECD said Monday in its interim Economic Outlook report. “Annual GDP growth in the United States is projected to slow from its strong recent pace, to be 2.2% in 2025 and 1.6% in 2026.”
• In its previous projections, published in December, the OECD had estimated 3.3% global economic growth this year and next. The U.S. economy had been expected to grow 2.4% in 2025 and 2.1% in 2026.
• Mathias Cormann, secretary-general of the OECD, on Monday said that the uncertainty around trade policy was a key factor in the organization’s projections.
• In its report, the OECD said its latest projections were “based on an assumption that bilateral tariffs between Canada and the United States and between Mexico and the United States are raised by an additional 25 percentage points on almost all merchandise imports from April.”
• If the tariff increases were lower, or applied to fewer goods, economic activity would be stronger and inflation would be lower than projected, “but global growth would still be weaker than previously expected,” the report noted.
• Canada and Mexico, both on the receiving end of tariffs imposed by the U.S., saw their growth outlooks slashed dramatically. Canada’s economy is now expected to grow 0.7% this year, down from the previous 2% estimate, and Mexico’s is projected to shrink by 1.3% — compared to a previously estimated 1.2% expansion.

(Source: CNBC)