U.S. growth forecast cut further by OECD as Trump tariffs sour outlook

Economic growth forecasts for the United States and the world have been reduced by the Organization for Economic Cooperation and Development, while President Donald Trump’s tariff disorders weigh on expectations.

The American growth prospects were revised downwards at only 1.6% this year and 1.5% in 2026. In March, the OECD still expected an expansion of 2.2% in 2025.

The fallout from Trump’s pricing policy, an increase in the uncertainty of economic policy, a slowdown in net immigration and a smaller federal workforce were cited as reasons for the last demotion.

Global growth, on the other hand, should also be lower than previously expected, the OECD claiming that “the slowdown is concentrated in the United States, Canada and Mexico”, while other savings should see smaller downward revisions.

“World GDP growth is expected to slow down from 3.3% in 2024 to 2.9% this year and in 2026 … on the technical assumption that tariff rates in mid-May are supported despite the legal challenges in progress,” said the OECD.

He had previously planned global growth of 3.1% this year and 3% in 2026.

“Global prospects are becoming more and more difficult,” said the report. “Substantial increases in business obstacles, stricter financial conditions, business confidence and lower consumers and increased uncertainty of policies will all have marked negative effects on growth prospects if they persist.”

Frequent changes concerning prices have continued in recent weeks, leading to uncertainty in the markets and global economies. Some of the most recent developments include reciprocal and specific samples in the country struck by the American Court of International Trade, before being reinstated by a court of appeal, as well as Trump saying that he double 50%steel tasks.

The OECD has adjusted its inflation forecasts, saying that “higher commercial costs, especially in countries increasing prices, will also increase inflation, although their impact is partly compensated by lower prices on raw materials”.

The impact of inflation prices has been strongly debated, many Central Bank decision-makers and global analysts suggest that it is not clear how the samples will have an impact on prices, and it depends a lot on factors such as potential countermeasures.

OECD inflation prospects show a significant difference between the United States and some of the other major economies in the world. For example, while G20 countries should now record 3.6% inflation in 2025 – against 3.8% in the Mars estimate – projection for the United States increased to 3.2%, compared to 2.8% previous.

American inflation could even end over 4% around 2025, said the OECD.