News

17 Mar 2025

...OECD: Rising Tariffs Will Slow Growth

The Organization for Economic Co-operation and Development (OECD) warned on Monday that the increase in tariffs imposed by President Donald Trump is expected to slow growth and increase inflation in the United States, Canada, and Mexico.

The organization also lowered its global economic forecast, highlighting the risk of a broader trade war that could further impact growth.

According to the OECD’s interim projections, the economic slowdown caused by a general trade shock would cost the U.S. more than the additional revenue expected from tariffs. The organization estimated that American households would bear a significant direct financial burden.

The Paris-based policy forum projected a slight slowdown in global growth, from 3.2% in 2024 to 3.1% in 2025 and 3.0% in 2026. These forecasts mark a downward revision from the December estimates, which predicted 3.3% growth for both this year and the next.

The OECD noted that these global figures mask variations among major economies. Resilient emerging markets, such as China, are helping offset a significant slowdown in North America.

The organization also warned that widespread tariff increases could negatively impact global business investment and drive inflation higher. This scenario would leave central banks with little choice but to maintain high interest rates for a longer period than previously expected.

The updated OECD forecasts assume a 25-percentage-point increase in tariffs between the U.S. and its neighbors on nearly all imported goods, starting in April.

As a result, U.S. economic growth is expected to slow to 2.2% this year and decline further to 1.6% next year, a downward revision from the previous forecast of 2.4% and 2.1%.

Mexico’s economy is projected to be hit hardest by the tariff increases, contracting by 1.3% this year and an additional 0.6% next year—a sharp shift from the previous growth forecast of 1.2% and 1.6%

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