Trump’s Tariff Policies Slam Global Growth, OECD Warns of Deepening Slowdown

President Donald Trump’s aggressive trade policies have thrown the global economy into a deeper slowdown, with the United States emerging as one of the worst-hit nations, according to the latest economic outlook by the Organisation for Economic Co-operation and Development (OECD). The OECD’s sobering report, released ahead of its annual summit in Paris, sharply downgrades global growth forecasts, citing Trump’s tariffs and trade wars as the central force behind plummeting business confidence, stalled investment, and rising inflation.

A Trade War with No Winners

The global growth forecast for 2025 was cut to 2.9%, down from 3.3% in 2024. The US economy is expected to slow sharply to 1.6%, a steep drop from last year’s 2.8%. The OECD had already revised growth expectations earlier this year, but the latest downgrade reflects escalating economic damage stemming from prolonged trade hostilities.

“Weakened economic prospects will be felt around the world, with almost no exception,” said OECD Chief Economist Alvaro Pereira at the Paris Summit. “Lower growth and less trade will hit incomes and slow job growth.”

According to the report, Trump tariffs have introduced a dangerous mix of trade barriers and policy uncertainty, discouraging investment and tightening financial conditions across both advanced and emerging economies.

U.S. Faces the Harshest Consequences

Ironically, the OECD notes that the U.S. is bearing the brunt of its own policies. Trade restrictions, tighter immigration controls, and a shrinking federal workforce are contributing to a severe economic drag.

The U.S. inflation rate is expected to rise further, reducing the likelihood of Federal Reserve interest rate cuts until at least 2026. The report warns that even if Trump were to reverse his trade stance, the economic damage from long-term uncertainty would not be undone quickly.

“There is no quick fix,” the OECD warned. “Confidence and global supply chains have been deeply disrupted.”

Additionally, the U.S. federal budget deficit is expected to balloon further, as weaker economic activity undercuts any revenue gains from tariffs and overshadows planned spending cuts.

The Call for De-escalation

The OECD urged world leaders gathering in Paris for the summit—including U.S. Trade Representative Jamieson Greer, EU Trade Commissioner Maros Sefcovic, and China’s Lin Feng—to prioritise rolling back Trump tariffs and rebuilding trust.

“Agreements to ease trade tensions and lower trade barriers are essential to revive growth and contain inflation,” the OECD said. “This is by far the most important policy priority.”

Fiscal and Inflationary Risks on the Rise

Beyond trade, the organization flagged rising fiscal pressures globally, from growing demands for defense and climate spending to aging populations. It called for governments to broaden tax bases and reduce non-essential expenditures to prevent future financial instability.

As Trump’s legacy continues to ripple across global markets, the OECD’s warning is clear: protectionism, such as Trump’s tariffs, is not just a political stance—it’s an economic hazard.

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— OECD ➡️ Better Policies for Better Lives (@OECD) June 3, 2025