US President Donald Trump’s aggressive stance on trade tariffs is predicted to have far-reaching consequences, according to the latest forecast from the Organisation for Economic Co-operation and Development (OECD).
In a move that has sparked concerns about global economic growth and inflation, the OECD has warned that escalating trade tensions could impact countries worldwide. Canada and Mexico are expected to bear the brunt of the fallout, as they have faced some of the harshest tariffs imposed by the United States. The OECD has revised its growth projections for Canada, slashing expectations for this year and the next, while predicting that Mexico could face a recession as a result of the trade measures.
President Trump’s decision to impose hefty tariffs on steel and aluminum imports, along with levies on goods from Mexico, Canada, and China, has set off a chain reaction of retaliatory measures. Canada and the European Union have already announced plans for counter-tariffs in response to the US actions.
The OECD has highlighted the negative impact of higher trade barriers and increased uncertainty on investment and consumer spending. The organization emphasized that these developments could lead to a rise in inflation, potentially prolonging the period of higher interest rates.
Expressing concerns about the potential fragmentation of the global economy, the OECD stressed the risks posed by a further escalation of trade disputes. It warned that expanding trade barriers could dampen economic growth worldwide and contribute to inflationary pressures.
The OECD’s latest forecast paints a sobering picture for the global economy. Growth is expected to slow from 3.2% in 2024 to 3.1% in 2025, largely due to the ongoing trade tensions. While inflation is projected to moderate, the organization anticipates a slightly higher rate compared to previous estimates.
The repercussions of the trade conflict are not limited to economic forecasts. Tesla, the electric car manufacturer led by Elon Musk, has also raised concerns about the potential impact on US exporters. In a letter to the US trade representative, Tesla highlighted the vulnerability of American exporters to retaliatory measures from other countries in response to the tariffs imposed by the Trump administration.
In the UK, the OECD has revised its growth forecast downward, reflecting a less optimistic outlook for the country’s economy. Projections for 2025 and 2026 have been adjusted to 1.4% and 1.2%, respectively, indicating a more cautious outlook compared to previous estimates. This adjustment aligns with the Bank of England’s recent downward revision of its growth forecast for 2025.
As the trade tensions continue to escalate, the global economic landscape remains uncertain. The OECD’s warnings about the potential consequences of a protracted trade war serve as a stark reminder of the interconnectedness of the world economy and the risks posed by protectionist measures.
In the face of these challenges, policymakers and businesses around the world are closely monitoring developments and assessing the potential impact on growth, inflation, and trade dynamics. The coming months will be crucial in determining the trajectory of the global economy and the implications of
